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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 24, 2007
To Our Stockholders:
We cordially invite you to attend the 2007 annual meeting of FedEx’s stockholders. The meeting
will take place in the Tennessee Grand Ballroom at the Hilton Hotel, 939 Ridge Lake Boulevard,
Memphis, Tennessee 38120, on Monday, September 24, 2007, at 10:00 a.m. local time. We look
forward to your attendance either in person or by proxy.
The purpose of the meeting is to:
1. Elect fourteen directors;
2. Ratify the appointment of Ernst & Young LLP as FedEx’s independent registered public
accounting firm for fiscal year 2008;
3. Act upon four stockholder proposals, if properly presented at the meeting; and
4. Transact any other business that may properly come before the meeting.
Only stockholders of record at the close of business on July 30, 2007 may vote at the meeting or
any postponements or adjournments of the meeting.
By order of the Board of Directors,
CHRISTINE P. RICHARDS
Secretary
August 13, 2007
HOW TO VOTE: Please complete, date, sign and return the accompanying proxy card or
voting instruction card, or vote electronically via the Internet or by telephone. The enclosed
return envelope requires no additional postage if mailed in the United States.
REDUCE MAILING COSTS: If you vote on the Internet, you may elect to have next year’s
proxy statement and annual report to stockholders delivered to you electronically. We strongly
encourage you to enroll in electronic delivery. It is a cost-effective way for us to provide you
with proxy materials and annual reports.
ANNUAL MEETING ADMISSION: If you attend the annual meeting in person, you will need
to present your admission ticket, or an account statement showing your ownership of FedEx
common stock as of the record date, and a valid government-issued photo identification. The
indicated portion of your proxy card or voting instruction card will serve as your admission
ticket. If you are a registered stockholder and receive your proxy materials electronically, you
should follow the instructions provided to print a paper admission ticket.
Your vote is very important. Please vote whether or not you plan to attend the meeting.
2007 PROXY STATEMENT
TABLE OF CONTENTS
Page
INFORMATION ABOUT THE ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
What is the purpose of the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Who is entitled to vote? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Am I entitled to vote if my shares are held in “street name”? . . . . . . . . . . . . . . . . . . . . . . . . . . 2
How many shares must be present to hold the meeting?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
What if a quorum is not present at the meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
How do I vote? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
How do I vote my shares held in a FedEx benefit plan? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Who can attend the meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Can I change my vote after I submit my proxy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Will my vote be kept confidential? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Who will count the votes? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
How does the Board of Directors recommend I vote on the proposals? . . . . . . . . . . . . . . . . . . 4
What if I do not specify how my shares are to be voted? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Will any other business be conducted at the meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
How many votes are required to elect each director nominee? . . . . . . . . . . . . . . . . . . . . . . . . 5
What happens if a nominee does not receive the required majority vote? . . . . . . . . . . . . . . . . 5
What happens if a nominee is unable to stand for election? . . . . . . . . . . . . . . . . . . . . . . . . . . 5
How many votes are required to ratify the appointment of FedEx’s independent registered
public accounting firm? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
How many votes are required to approve each of the stockholder proposals? . . . . . . . . . . . . . 5
How will abstentions be treated? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
How will broker non-votes be treated? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Will the meeting be Webcast? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
STOCK OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Significant Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
CORPORATE GOVERNANCE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Corporate Governance Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Audit Committee Financial Expert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Director Mandatory Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Stock Ownership Goal for Directors and Senior Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Policy Statement on Poison Pills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Executive Sessions of Non-Management Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Communications with Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Nomination of Director Candidates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Majority-Voting Standard for Director Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Policy on Review and Preapproval of Related Person Transactions . . . . . . . . . . . . . . . . . . . . . 14
Related Person Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . . . . . . . . 15
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . 16
Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Attendance at Annual Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PROPOSAL 1 – ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS . . . . . . . 21
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TABLE OF CONTENTS
(Continued)
Page
COMPENSATION DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Compensation Philosophy, Objectives and Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Role of the Compensation Committee, Its Compensation Consultant and the Chairman of the
Board, President and Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Description of Compensation Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Long-Term Equity Incentives – Stock Options and Restricted Stock . . . . . . . . . . . . . . . . . . . . . 33
Other Elements of Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Tax Deductibility of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
GRANTS OF PLAN-BASED AWARDS DURING FISCAL 2007 . . . . . . . . . . . . . . . . . . . . . . . . . 42
OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2007 . . . . . . . . . . . . . . . . . . . . . . . . . 44
OPTION EXERCISES AND STOCK VESTED DURING FISCAL 2007 . . . . . . . . . . . . . . . . . . . . 47
FISCAL 2007 PENSION BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Overview of Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Traditional Pension Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Portable Pension Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Lump Sum Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
FISCAL 2007 NONQUALIFIED DEFERRED COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . 51
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL . . . . . . . . . . . . . 52
Benefits Triggered by Retirement, Death or Permanent Disability – Stock Option and
Restricted Stock Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Benefits Triggered by Change of Control or Termination After Change of Control – Stock
Option and Restricted Stock Plans and Management Retention Agreements . . . . . . . . . . . . 53
Consulting Agreement and Non-Competition Agreement with Daniel J. Sullivan. . . . . . . . . . . . 56
DIRECTORS’ COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Outside Directors’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Retirement Plan for Outside Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Fiscal 2007 Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
EQUITY COMPENSATION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Equity Compensation Plans Approved by Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Equity Compensation Plans Not Approved by Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Summary Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS . . . . . . . . . . . . . . . 62
AUDIT AND NON-AUDIT FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
PROPOSAL 2 – RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Appointment of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . 64
Policies Regarding Independent Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Vote Required for Ratification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
PROPOSAL 3 – STOCKHOLDER PROPOSAL: SEPARATION OF CHAIRMAN AND CEO
ROLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Board of Directors’ Statement in Opposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Vote Required for Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
PROPOSAL 4 – STOCKHOLDER PROPOSAL: SHAREHOLDER VOTE ON EXECUTIVE
PAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Board of Directors’ Statement in Opposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Vote Required for Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
PROPOSAL 5 – STOCKHOLDER PROPOSAL: GLOBAL WARMING REPORT . . . . . . . . . . . . 71
Board of Directors’ Statement in Opposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Vote Required for Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ii
TABLE OF CONTENTS
(Continued)
Page
PROPOSAL 6 – STOCKHOLDER PROPOSAL: POLITICAL CONTRIBUTIONS REPORT . . . . 73
Board of Directors’ Statement in Opposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Vote Required for Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Proxy Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Householding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Stockholder Proposals for 2008 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
iii
FedEx Corporation
942 South Shady Grove Road
Memphis, Tennessee 38120
2007 PROXY STATEMENT
FedEx’s Board of Directors is furnishing you this proxy statement in connection with the
solicitation of proxies on its behalf for the 2007 Annual Meeting of Stockholders. The meeting will take
place in the Tennessee Grand Ballroom at the Hilton Hotel, 939 Ridge Lake Boulevard, Memphis,
Tennessee 38120, on Monday, September 24, 2007, at 10:00 a.m. local time. At the meeting,
stockholders will vote on the election of fourteen directors, the ratification of FedEx’s independent
registered public accounting firm and, if properly presented at the meeting, four stockholder proposals.
Stockholders also will consider any other matters that may properly come before the meeting,
although we know of no other business to be presented.
By submitting your proxy (either by signing and returning the enclosed proxy card or by voting
electronically on the Internet or by telephone), you authorize Christine P. Richards, FedEx’s Executive
Vice President, General Counsel and Secretary, and Alan B. Graf, Jr., FedEx’s Executive Vice
President and Chief Financial Officer, to represent you and vote your shares at the meeting in
accordance with your instructions. They also may vote your shares to adjourn the meeting and will be
authorized to vote your shares at any postponements or adjournments of the meeting.
FedEx’s Annual Report to Stockholders for the fiscal year ended May 31, 2007, which includes
FedEx’s fiscal 2007 audited consolidated financial statements, accompanies this proxy statement.
Although the Annual Report is being distributed with this proxy statement, it does not constitute a part
of the proxy solicitation materials and is not incorporated by reference into this proxy statement.
We are first sending the proxy statement, form of proxy and accompanying materials to
stockholders on or about August 13, 2007.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE PROMPTLY VOTE YOUR SHARES EITHER BY MAIL, VIA THE INTERNET OR BY
TELEPHONE.
1
INFORMATION ABOUT THE ANNUAL MEETING
What is the purpose of the annual meeting?
At the annual meeting, the stockholders will be asked to:
• elect fourteen directors;
• ratify the appointment of Ernst & Young LLP as FedEx’s independent registered public
accounting firm; and
• act on four stockholder proposals, if properly presented.
Stockholders also will transact any other business that may properly come before the meeting.
Members of FedEx’s management team will be present at the meeting to respond to appropriate
questions from stockholders.
Who is entitled to vote?
The record date for the meeting is July 30, 2007. Only stockholders of record at the close of
business on that date are entitled to vote at the meeting. The only class of stock entitled to be voted
at the meeting is FedEx common stock. Each outstanding share of common stock is entitled to one
vote for all matters before the meeting. At the close of business on the record date there were
309,153,228 shares of FedEx common stock outstanding.
Am I entitled to vote if my shares are held in “street name”?
If your shares are held by a bank, brokerage firm or other nominee, you are considered the
“beneficial owner” of shares held in “street name.” If your shares are held in street name, these proxy
materials are being forwarded to you by your bank, brokerage firm or other nominee (the “record
holder”), along with a voting instruction card. As the beneficial owner, you have the right to direct your
record holder how to vote your shares, and the record holder is required to vote your shares in
accordance with your instructions. If you do not give instructions to your bank, brokerage firm or other
nominee, it will nevertheless be entitled to vote your shares in its discretion on the election of directors
(Proposal 1) and the ratification of the appointment of the independent registered public accounting
firm (Proposal 2). Absent your instructions, the record holder will not be permitted, however, to vote
your shares on the adoption of the four stockholder proposals (Proposals 3, 4, 5 and 6) and your
shares will be considered “broker non-votes” on those proposals.
As the beneficial owner of shares, you are invited to attend the annual meeting. If you are a
beneficial owner, however, you may not vote your shares in person at the meeting unless you obtain a
legal proxy, executed in your favor, from the record holder of your shares.
How many shares must be present to hold the meeting?
A quorum must be present at the meeting for any business to be conducted. The presence at the
meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding
on the record date will constitute a quorum. Proxies received but marked as abstentions or treated as
broker non-votes will be included in the calculation of the number of shares considered to be present
at the meeting.
What if a quorum is not present at the meeting?
If a quorum is not present or represented at the meeting, the holders of a majority of the shares
entitled to vote at the meeting who are present in person or represented by proxy, or the chairman of
the meeting, may adjourn the meeting until a quorum is present or represented. The time and place of
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the adjourned meeting will be announced at the time the adjournment is taken, and no other notice
will be given.
How do I vote?
1. YOU MAY VOTE BY MAIL. If you properly complete, sign and date the accompanying proxy
card or voting instruction card and return it in the enclosed envelope, it will be voted in accordance
with your instructions. The enclosed envelope requires no additional postage if mailed in the United
States.
2. YOU MAY VOTE BY TELEPHONE OR ON THE INTERNET. If you are a registered
stockholder (that is, if you hold your stock directly and not in street name), you may vote by telephone
or on the Internet by following the instructions included on the proxy card. If you vote by telephone or
on the Internet, you do not have to mail in your proxy card. If you wish to attend the meeting in
person, however, you will need to bring your admission ticket. Internet and telephone voting are
available 24 hours a day. Votes submitted through the Internet or by telephone must be received by
11:59 p.m. Eastern time on September 23, 2007.
If you are the beneficial owner of shares held in street name, you still may be able to vote your
shares electronically by telephone or on the Internet. The availability of telephone and Internet voting
will depend on the voting process of your bank, brokerage firm or other holder of record. We
recommend that you follow the instructions set forth on the voting instruction card provided to you.
NOTE: If you vote on the Internet, you may elect to have next year’s proxy statement and
annual report to stockholders delivered to you electronically. We strongly encourage you
to enroll in electronic delivery. It is a cost-effective way for us to provide you with proxy
materials and annual reports.
3. YOU MAY VOTE IN PERSON AT THE MEETING. If you are a registered stockholder and
attend the meeting, you may deliver your completed proxy card in person. Additionally, we will pass
out ballots to registered stockholders who wish to vote in person at the meeting. If you are a beneficial
owner of shares held in street name who wishes to vote at the meeting, you will need to obtain a legal
proxy from your record holder and bring it with you to the meeting.
How do I vote my shares held in a FedEx benefit plan?
If you own shares of FedEx common stock through a FedEx or subsidiary benefit plan, you can
direct the trustee or the record holder to vote the shares held in your account in accordance with your
instructions by completing the proxy card and returning it in the enclosed envelope or by registering
your instructions via the Internet or telephone as directed on the proxy card. If you register your voting
instructions by telephone or on the Internet, you do not have to mail in the proxy card. If you wish to
attend the meeting in person, however, you will need to bring the admission ticket attached to the
proxy card with you. In order to instruct a plan trustee or record holder on the voting of shares held in
your account, your instructions must be received by September 19, 2007. If your voting instructions
are not received by that date, each plan trustee will vote your shares in the same proportion as the
shares for which voting instructions have been received.
Who can attend the meeting?
Only stockholders eligible to vote or their authorized representatives will be admitted to the
meeting. If you plan to attend the meeting, detach and bring with you the stub portion of your proxy
card, which is marked “Admission Ticket.” You also must bring a valid government-issued photo
identification, such as a driver’s license or a passport. If you received your proxy materials through the
Internet, you should follow the instructions provided to print a paper admission ticket.
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If your shares are held in street name, you must bring the indicated portion of your voting
instruction card. Alternatively, you may bring other proof of ownership, such as a brokerage account
statement, which clearly shows your ownership of FedEx common stock as of the record date. In
addition, you must bring a valid government-issued photo identification, such as a driver’s license or a
passport.
Security measures will be in place at the meeting to help ensure the safety of attendees.
Metal detectors similar to those used in airports will be located at the entrance to the meeting
room and briefcases, handbags and packages will be inspected. No cameras or recording
devices of any kind, or signs, placards, banners or similar materials, may be brought into the
meeting. Anyone who refuses to comply with these requirements will not be admitted.
Can I change my vote after I submit my proxy?
Yes, if you are a registered stockholder you may revoke your proxy and change your vote by:
• submitting a valid, later-dated proxy card or a later-dated vote by telephone or on the Internet
(the latest-dated, properly completed proxy that you submit, whether by mail, by telephone or
on the Internet, will count as your vote); or
• giving written notice of such revocation to the Secretary of FedEx prior to or at the meeting or
by voting in person at the meeting.
Your attendance at the meeting itself will not revoke your proxy unless you give written notice of
revocation to the Secretary before your proxy is voted or you vote in person at the meeting.
If your shares are held in street name, you should contact your bank, brokerage firm or other
nominee and follow its procedures for changing your voting instructions. You may also vote in person
at the meeting if you obtain a legal proxy from your record holder.
Will my vote be kept confidential?
Yes, your vote will be kept confidential and not disclosed to FedEx unless:
• required by law;
• you expressly request disclosure on your proxy; or
• there is a proxy contest.
Who will count the votes?
FedEx’s transfer agent, Computershare Trust Company, N.A., will tabulate and certify the votes. A
representative of the transfer agent will serve as the inspector of election.
How does the Board of Directors recommend I vote on the proposals?
Your Board recommends that you vote:
• FOR the election of each of the fourteen nominees to the Board of Directors;
• FOR the ratification of the appointment of Ernst & Young LLP as FedEx’s independent
registered public accounting firm; and
• AGAINST each of the stockholder proposals.
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What if I do not specify how my shares are to be voted?
If you submit a proxy but do not indicate any voting instructions, your shares will be voted:
• FOR the election of each of the fourteen nominees to the Board of Directors;
• FOR the ratification of the appointment of Ernst & Young LLP as FedEx’s independent
registered public accounting firm; and
• AGAINST each of the stockholder proposals.
Will any other business be conducted at the meeting?
FedEx’s Bylaws require stockholders to give advance notice of any proposal intended to be
presented at the meeting. The deadline for this notice has passed and we have not received any such
notices. If any other matter properly comes before the stockholders for a vote at the meeting,
however, the proxy holders will vote your shares in accordance with their best judgment.
How many votes are required to elect each director nominee?
A nominee will be elected to the Board of Directors if the number of votes cast “for” such
nominee’s election exceeds the number of votes cast “against” such nominee’s election. See
“Corporate Governance Matters — Majority-Voting Standard for Director Elections” on page 14.
What happens if a nominee does not receive the required majority vote?
A nominee who is not already serving as a director and who fails to receive the required majority
vote will not be elected and thus will not serve on the Board of Directors.
Each current director who is standing for reelection at the annual meeting has tendered an
irrevocable resignation from the Board that will take effect if the director does not receive the required
majority vote and the Board accepts the resignation. If the Board of Directors accepts the resignation,
the director will no longer serve on the Board, and if the Board rejects the resignation, the director will
continue to serve until his or her successor has been duly elected and qualified or until his or her
earlier disqualification, death, resignation or removal. See “Corporate Governance Matters —
Majority-Voting Standard for Director Elections” on page 14.
What happens if a nominee is unable to stand for election?
If a nominee is unable to stand for election, the Board of Directors may either reduce the number
of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy
holders may vote your shares for the substitute nominee.
How many votes are required to ratify the appointment of FedEx’s independent registered
public accounting firm?
The ratification of the appointment of Ernst & Young LLP as FedEx’s independent registered
public accounting firm requires the affirmative vote of a majority of the shares present at the meeting
in person or by proxy and entitled to vote.
How many votes are required to approve each of the stockholder proposals?
If a stockholder proposal is properly presented at the meeting, approval of the proposal requires
the affirmative vote of a majority of the shares present at the meeting in person or by proxy and
entitled to vote. Approval of a stockholder proposal would merely serve as a recommendation to the
Board to take the necessary steps to implement such proposal.
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How will abstentions be treated?
Abstentions will have no effect on the election of directors (Proposal 1). For all other proposals,
abstentions will be treated as shares present for quorum purposes and entitled to vote, so they will
have the same practical effect as votes against a proposal.
How will broker non-votes be treated?
Broker non-votes will be treated as shares present for quorum purposes, but not entitled to vote.
Absent instructions from you, your broker may not vote your shares on the adoption of the four
stockholder proposals (Proposals 3, 4, 5 and 6). A broker non-vote with respect to these proposals
will not affect their outcome.
Your broker will be entitled to vote your shares in its discretion on the election of directors
(Proposal 1) and the ratification of the appointment of the independent registered public accounting
firm (Proposal 2), without your voting instructions on these items.
Will the meeting be Webcast?
The meeting will be Webcast on September 24, 2007. You are invited to visit the Investor
Relations page of our Web site (http://www.fedex.com/us/investorrelations) at 10:00 a.m. Central time
on September 24, 2007 to access the live Webcast of the meeting. An archived copy of the Webcast
will be available on our Web site for one year. The information on FedEx’s Web site, however, is not
incorporated by reference in, and does not form part of, this proxy statement.
6
STOCK OWNERSHIP
Directors and Executive Officers
The following table sets forth the amount of FedEx’s common stock beneficially owned by each
director or nominee, each named executive officer included in the Summary Compensation Table on
page 36 and all directors, nominees and executive officers as a group, as of July 30, 2007. Unless
otherwise indicated, beneficial ownership is direct and the person indicated has sole voting and
investment power.
Common Stock Beneficially Owned
Number Number of Percent of
Name of Beneficial Owner of Shares Option Shares(1) Class(2)
Frederick W. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,285,224(3) 2,781,250 7.07%
James L. Barksdale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,800(4) 22,800 *
August A. Busch IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 26,150 *
John A. Edwardson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,250 30,800 *
Judith L. Estrin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000 66,800 *
J. Kenneth Glass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 22,800 *
Philip Greer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,812(5) 62,800 *
J.R. Hyde, III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,600(6) 66,800 *
Shirley A. Jackson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 24,800 *
Steven R. Loranger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000(7) 4,400 *
Gary W. Loveman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – –
Charles T. Manatt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 15,800 *
Joshua I. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,086 32,600 *
Paul S. Walsh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,500 42,800 *
Peter S. Willmott . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,690(8) 30,800 *
David J. Bronczek. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,332(9) 468,216 *
Robert B. Carter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,936 149,269 *
T. Michael Glenn. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182,990(10) 227,312 *
Alan B. Graf, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,448(11) 360,437 *
Daniel J. Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,469(12) 76,241 *
All directors, nominees and executive officers as a group
(23 persons)(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,384,203(14) 4,671,123 7.98%
* Less than 1% of FedEx’s outstanding common stock.
(1) Reflects the number of shares that can be acquired at July 30, 2007 or within 60 days thereafter
through the exercise of stock options. These shares are excluded from the column headed
“Number of Shares,” but included in the ownership percentages reported in the column headed
“Percent of Class.”
(2) Based on 309,153,228 shares outstanding on July 30, 2007.
(3) Includes 14,935,085 shares owned by Mr. Smith (2,819,692 of such shares have been pledged
as security by Mr. Smith), 4,141,280 shares owned by Frederick Smith Enterprise Company, Inc.
(“Enterprise”), a family holding company (496,000 of such shares have been pledged as security
by Enterprise), 736 shares owned by Mr. Smith’s spouse and 205,856 shares held in trust for the
benefit of Mr. Smith’s children. Regions Morgan Keegan Trust, FSB, Memphis, Tennessee, as
trustee of a trust of which Mr. Smith is the lifetime beneficiary, holds 55% of Enterprise’s
outstanding stock and Mr. Smith owns 45% directly. Includes 2,267 shares held in FedEx’s
retirement savings plan. Mr. Smith’s business address is 942 South Shady Grove Road,
Memphis, Tennessee 38120.
(4) Includes 2,000 shares held in a managed account of which Mr. Barksdale is trustee and
44,800 shares held in other managed accounts.
(5) Excludes 36,784 shares owned by members of Mr. Greer’s family, as to which Mr. Greer
disclaims beneficial ownership, and includes 37,312 shares owned by Greer Investment
7
Partners II, L.P. Mr. Greer disclaims beneficial ownership of the shares owned by the partnership
except to the extent of his pecuniary interest therein.
(6) Includes 11,600 shares owned by family trusts and 80,000 shares pledged as security by
Mr. Hyde.
(7) Owned by a family trust.
(8) Includes 128,690 shares pledged as security by Mr. Willmott.
(9) Includes 659 shares held in FedEx’s retirement savings plan.
(10) Includes 88,750 shares owned by Glenn Family Partners, L.P. Mr. Glenn disclaims beneficial
ownership of these shares except to the extent of his pecuniary interest therein. Also includes
541 shares held in FedEx’s retirement savings plan.
(11) Includes 7,400 shares owned by a family trust and 423 shares held in FedEx’s retirement
savings plan.
(12) Includes 25,484 shares held in a 401(k) plan and 29,911 stock units held in deferred
compensation plans. These stock units are payable in shares of FedEx common stock on a
one-for-one basis.
(13) Does not include Mr. Sullivan, who retired as FedEx Ground’s President and Chief Executive
Officer on December 31, 2006.
(14) Includes 1,000 stock units held in a deferred compensation plan. These stock units are payable
in shares of FedEx common stock on a one-for-one basis. Also includes an aggregate
4,899 shares held in FedEx’s retirement savings plan.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires directors and certain officers of
FedEx and persons who own more than ten percent of FedEx’s common stock to file with the
Securities and Exchange Commission initial reports of beneficial ownership (Form 3) and reports of
subsequent changes in their beneficial ownership (Form 4 or Form 5) of FedEx’s common stock. Such
directors, officers and greater-than-ten-percent stockholders are required to furnish FedEx with copies
of the Section 16(a) reports they file. The Securities and Exchange Commission has established
specific due dates for these reports, and FedEx is required to disclose in this proxy statement any late
filings or failures to file.
Based solely upon a review of the copies of the Section 16(a) reports (and any amendments
thereto) furnished to FedEx and written representations from certain reporting persons that no
additional reports were required, FedEx believes that its directors, reporting officers and
greater-than-ten-percent stockholders complied with all these filing requirements for the fiscal year
ended May 31, 2007.
8
Significant Stockholders
The following table lists certain persons known by FedEx to own beneficially more than five
percent of FedEx’s outstanding shares of common stock as of March 31, 2007.
Amount and Nature of
Beneficial Ownership Percent of Class
Dodge & Cox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,783,878(1) 7.08%
555 California Street, 40th Floor
San Francisco, California 94014
PRIMECAP Management Company . . . . . . . . . . . . . . . . . . . . . 20,759,929(2) 6.74%
225 South Lake Avenue, Suite 400
Pasadena, California 91101
Marsico Capital Management, LLC . . . . . . . . . . . . . . . . . . . . . . 20,479,243(3) 6.65%
1200 17th Street, Suite 1600
Denver, Colorado 80202
(1) Dodge & Cox, a registered investment advisor, had sole voting power over 20,306,086 shares and
sole investment power over all 21,783,878 shares.
(2) PRIMECAP Management Company, a registered investment advisor, had sole voting power over
3,482,385 shares and sole investment power over all 20,759,929 shares.
(3) Marsico Capital Management, LLC, a registered investment advisor, had sole voting power over
17,097,797 shares and sole investment power over all 20,479,243 shares.
9
CORPORATE GOVERNANCE MATTERS
Corporate Governance Documents
In furtherance of its longstanding goals of providing effective governance of FedEx’s business and
affairs for the long-term benefit of stockholders and promoting a culture and reputation of the highest
ethics, integrity and reliability, the Board of Directors has adopted Corporate Governance Guidelines,
charters for each of its Board committees and a Code of Business Conduct & Ethics for directors,
officers and employees of FedEx. Each of these documents is available, free of charge, in print to any
stockholder who requests it and in the corporate governance section of the Investor Relations page of
our Web site at http://www.fedex.com/us/investorrelations/corpgov. The information on FedEx’s Web
site, however, is not incorporated by reference in, and does not form part of, this proxy statement.
Director Independence
The Board of Directors has determined that each member of the Audit, Compensation and
Nominating & Governance Committees and, with the exception of Frederick W. Smith and J.R.
Hyde, III, each of the Board’s current members (James L. Barksdale, August A. Busch IV, John A.
Edwardson, Judith L. Estrin, J. Kenneth Glass, Philip Greer, Shirley Ann Jackson, Steven R. Loranger,
Charles T. Manatt, Joshua I. Smith, Paul S. Walsh and Peter S. Willmott), as well as Gary W.
Loveman, is independent and meets the applicable independence requirements of the New York Stock
Exchange (including the additional requirements for Audit Committee members) and the Board’s more
stringent standards for determining director independence. Mr. Smith is FedEx’s Chairman of the
Board, President and Chief Executive Officer. Mr. Hyde has an ownership interest in HOOPS, L.P.,
with which FedEx has a relationship. For more information, please see “— Related Person
Transactions” below.
Under the Board’s standards of director independence, which are included in FedEx’s Corporate
Governance Guidelines, a director will be considered independent only if the Board affirmatively
determines that the director has no direct or indirect material relationship with FedEx, other than as a
director. The standards set forth certain categories or types of transactions, relationships or
arrangements with FedEx, as follows, each of which (i) is deemed not to be a material relationship
with FedEx, and thus (ii) will not, by itself, prevent a director from being considered independent:
• Prior Employment of Director. The director was employed by FedEx or was personally
working on FedEx’s audit as an employee or partner of FedEx’s independent auditor, and
over five years have passed since such employment, partner or auditing relationship ended.
• Prior Employment of Immediate Family Member. An immediate family member was an
officer of FedEx or was personally working on FedEx’s audit as an employee or partner of
FedEx’s independent auditor, and over five years have passed since such employment,
partner or auditing relationship ended.
• Current Employment of Immediate Family Member. An immediate family member is
employed by FedEx in a non-officer position, or by FedEx’s independent auditor not as a
partner and not participating in the firm’s audit, assurance or tax compliance practice.
• Interlocking Directorships. An executive officer of FedEx served on the board of directors
of a company that employed the director or employed an immediate family member as an
executive officer, and over five years have passed since either such relationship ended.
• Business Relationships. The director or an immediate family member is a partner, greater
than 10% shareholder, director or officer of a company that makes or has made payments to,
or receives or has received payments (other than contributions, if the company is a
tax-exempt organization) from, FedEx for property or services, and the amount of such
payments has not within any of such other company’s three most recently completed fiscal
10
years exceeded one percent (or $1 million, whichever is greater) of such other company’s
consolidated gross revenues for such year.
• Indebtedness. The director or an immediate family member is a partner, greater than 10%
shareholder, director or officer of a company that is indebted to FedEx or to which FedEx is
indebted, and the aggregate amount of such debt is less than one percent (or $1 million,
whichever is greater) of the total consolidated assets of the indebted company.
• Charitable Contributions. The director is a trustee, fiduciary, director or officer of a
tax-exempt organization to which FedEx contributes, and the contributions to such
organization by FedEx have not within any of such organization’s three most recently
completed fiscal years exceeded one percent (or $250,000, whichever is greater) of such
organization’s consolidated gross revenues for such year.
In making its independence determinations, the Board broadly considered all relevant facts and
circumstances, including the following immaterial transactions, relationships and arrangements:
• Messrs. Barksdale and Willmott each served as officers of FedEx, but they left the company
well over five years ago (Mr. Barksdale’s employment at FedEx ended in 1992, and
Mr. Willmott’s employment at FedEx ended in 1983).
• FedEx has made charitable contributions to tax-exempt organizations for which each of the
following independent directors serves as a trustee or director: Messrs. Barksdale, Glass,
Greer and Manatt. The contributions by FedEx to each such organization have not within any
of the other organization’s three most recently completed fiscal years exceeded one percent
(or $250,000, whichever is greater) of the other organization’s consolidated gross revenues
for such year. In addition, David J. Bronczek, a FedEx executive officer, and Mr. Glass serve
together on the board of a Memphis-based non-profit organization.
• In the ordinary course of business, FedEx makes purchases from entities for which each of
the following independent directors serves as an officer: Messrs. Edwardson and Loranger.
The amount of the payments made by FedEx to each such entity has not within any of the
other entity’s three most recently completed fiscal years exceeded one percent (or $1 million,
whichever is greater) of the other entity’s consolidated gross revenues for such year.
• Robert B. Carter, a FedEx executive officer, serves as an advisor to a venture capital firm for
which Mr. Greer is a limited partner.
• Frederick W. Smith is a passive investor (holding a less-than-2% interest) in Packet Design,
LLC, an Internet technology company, and Ms. Estrin is an executive officer of Packet Design
and beneficially owns approximately 18% of its outstanding capital stock.
Audit Committee Financial Expert
The Board of Directors has determined that at least one member of the Audit Committee, John A.
Edwardson, is an audit committee financial expert as such term is defined in Item 407(d)(5) of
Regulation S-K, promulgated by the Securities and Exchange Commission.
Director Mandatory Retirement
A director must retire immediately before the annual meeting of FedEx’s stockholders during the
calendar year in which he or she attains age 72. There are no directors retiring under this provision at
the annual meeting.
11
Stock Ownership Goal for Directors and Senior Officers
In order to encourage significant stock ownership by our directors and senior officers, and to
further align their interests with the interests of FedEx’s stockholders, the Board of Directors has
established a goal that (i) within three years after joining the Board, each non-management director
own FedEx shares valued at three times his or her annual retainer fee, and (ii) within four years after
being appointed to his or her position, each member of senior management own FedEx shares valued
at the following multiple of his or her annual base salary:
• 5x for the Chairman of the Board, President and Chief Executive Officer;
• 3x for the other FedEx executive officers;
• 2x for executive vice presidents of FedEx’s core operating companies; and
• 1x for certain other senior officers.
For purposes of meeting this goal, unvested restricted stock is counted, but unexercised stock
options are not. The Board also recommends that each director and senior officer retain shares
acquired upon stock option exercises until his or her goal is met. The stock ownership goal is included
in FedEx’s Corporate Governance Guidelines. As of July 30, 2007, each FedEx director who had
been on the Board for over three years and each executive officer owned sufficient shares to comply
with this goal.
Policy Statement on Poison Pills
The Board of Directors has adopted a policy requiring stockholder approval for any future “poison
pill” prior to or within twelve months after adoption of the poison pill. (A poison pill is a device used to
deter a hostile takeover. Note that FedEx does not currently have, nor have we ever had, a poison
pill.) The policy on poison pills is included in FedEx’s Corporate Governance Guidelines.
Executive Sessions of Non-Management Directors
Non-management Board members meet without management present at least four times annually
at regularly scheduled executive sessions. At least once a year, such meetings include only the
independent members of the Board. The Chairman of the Nominating & Governance Committee
presides over meetings of the non-employee and independent directors.
Communications with Directors
You may communicate directly with any member or committee of the Board of Directors by writing
to: FedEx Corporation Board of Directors, c/o Corporate Secretary, 942 South Shady Grove Road,
Memphis, Tennessee 38120. Please specify to whom your letter should be directed. The Corporate
Secretary of FedEx will review all such correspondence and regularly forward to the Board a summary
of all such correspondence and copies of all correspondence that, in her opinion, deals with the
functions of the Board or its committees or that she otherwise determines requires the attention of any
member, group or committee of the Board of Directors. Board members may at any time review a log
of all correspondence received by FedEx that is addressed to Board members and request copies of
any such correspondence.
Nomination of Director Candidates
The Nominating & Governance Committee will consider director nominees proposed by
stockholders. To recommend a prospective director candidate for the Nominating & Governance
Committee’s consideration, stockholders may submit the candidate’s name, qualifications, including
whether the candidate satisfies the requirements set forth below, and other relevant biographical
information in writing to: FedEx Corporation Nominating & Governance Committee, c/o Corporate
12
Secretary, 942 South Shady Grove Road, Memphis, Tennessee 38120. FedEx’s Bylaws require
stockholders to give advance notice of stockholder proposals, including nominations of director
candidates. For more information, please see page 77, “Additional Information — Stockholder
Proposals for 2008 Annual Meeting.”
The Board is responsible for recommending director candidates for election by the stockholders
and for electing directors to fill vacancies or newly created directorships. The Board has delegated the
screening and evaluation process for director candidates to the Nominating & Governance Committee,
which identifies, evaluates and recruits highly qualified director candidates and recommends them to
the Board. The Nominating & Governance Committee considers potential candidates for director,
which may come to the attention of the Nominating & Governance Committee through current
directors, management, professional search firms, stockholders or other persons. The Nominating &
Governance Committee considers and evaluates a director candidate recommended by a stockholder
in the same manner as a nominee recommended by a Board member, management or other sources.
If the Nominating & Governance Committee determines that an additional or replacement director
is necessary or advisable, the Nominating & Governance Committee may take such measures that it
considers appropriate in connection with its evaluation of a potential director candidate, including
interviewing the candidate, engaging an outside firm to gather additional information and making
inquiries of persons with knowledge of the candidate’s qualifications and character. In its evaluation of
potential director candidates, including the members of the Board of Directors eligible for reelection,
the Nominating & Governance Committee considers the current size, composition and needs of the
Board of Directors and each of its committees.
Candidates nominated for election or reelection to the Board of Directors must possess the
following minimum qualifications:
• The highest level of personal and professional ethics, integrity and values;
• An inquiring and independent mind;
• Practical wisdom and mature judgment;
• Broad training and experience at the policy-making level in business, finance and accounting,
government, education or technology;
• Expertise that is useful to FedEx and complementary to the background and experience of
other Board members, so that an optimal balance of Board members can be achieved and
maintained;
• Willingness to devote the required time to carrying out the duties and responsibilities of
Board membership;
• Commitment to serve on the Board for several years to develop knowledge about FedEx’s
business;
• Willingness to represent the best interests of all stockholders and objectively appraise
management performance; and
• Involvement only in activities or interests that do not conflict with the director’s responsibilities
to FedEx and its stockholders.
In addition, it is expected that the following qualities or skills be possessed by one or more of
FedEx’s Board members: transportation industry experience; international experience; financial
expertise; marketing expertise; technological expertise; energy expertise; and government experience.
13
Gary W. Loveman is the only nominee who is not an executive officer of FedEx or a current
director standing for reelection. Frederick W. Smith, FedEx’s Chairman of the Board, President and
Chief Executive Officer, and Peter S. Willmott, Chairman of the Nominating & Governance Committee,
recommended Mr. Loveman as a nominee for election at the annual meeting.
The Nominating & Governance Committee has engaged a third-party executive search firm to
assist in identifying potential board candidates, including Mr. Loveman.
Majority-Voting Standard for Director Elections
Effective March 12, 2007, the Board of Directors amended FedEx’s Bylaws to adopt a
majority-voting standard in uncontested director elections and a resignation requirement for directors
who fail to receive the required majority vote. The amended Bylaws also prohibit the Board from
changing back to a plurality-voting standard without the approval of our stockholders. Under the new
majority-voting standard, a director nominee must receive more votes cast “for” than “against” his or
her election in order to be elected to the Board. Previously, our directors were elected under a
plurality-voting standard, in which candidates receiving the most votes were elected regardless of
whether those votes constituted a majority.
In accordance with this majority-voting standard and resignation requirement, each incumbent
director who is standing for reelection at the annual meeting has tendered an irrevocable resignation
from the Board of Directors that will take effect if (i) the director does not receive more votes cast “for”
than “against” his or her election at the annual meeting, and (ii) the Board accepts the resignation.
FedEx’s Bylaws require the Board of Directors, within 90 days after certification of the election results,
to accept the director’s resignation unless there is a compelling reason not to do so and to promptly
disclose its decision (including, if applicable, the reasons for rejecting the resignation) in a filing with
the Securities and Exchange Commission.
Policy on Review and Preapproval of Related Person Transactions
The Board of Directors has adopted a Policy on Review and Preapproval of Related Person
Transactions, which is included in FedEx’s Corporate Governance Guidelines. The policy requires that
all proposed related person transactions (as defined in the policy) and all proposed material changes
to existing related person transactions be reviewed and preapproved by the Nominating &
Governance Committee. To the extent the related person (as defined in the policy) is a director or
immediate family member of a director, the transaction or change must also be reviewed and
preapproved by the full Board. The policy provides that a related person transaction or a material
change to an existing related person transaction may not be preapproved if it would:
• interfere with the objectivity and independence of any related person’s judgment or conduct
in carrying out his or her duties and responsibilities to FedEx;
• not be fair as to FedEx; or
• otherwise be opposed to the best interests of FedEx and its stockholders.
The policy requires the Nominating & Governance Committee to annually (i) review each existing
related person transaction that has a remaining term of at least one year or remaining payments of at
least $120,000, and (ii) determine, based upon all material facts and circumstances and taking into
consideration our contractual obligations, whether it is in the best interests of FedEx and our
stockholders to continue, modify or terminate the transaction or relationship.
14
Related Person Transactions
In accordance with the policy described above, the Nominating & Governance Committee has
reviewed the following related person transactions and determined that they remain in the best
interests of FedEx and our stockholders:
• In July 2005, FedEx Ground entered into a five-year lease for a FedEx Home Delivery facility
near Milwaukee, Wisconsin. FedEx Ground has the option to extend the lease through
September 30, 2012. Under the lease, FedEx Ground’s initial gross lease payments are
$345,707 per year, which amount will increase to $361,369 per year after the third year of
the lease. The gross lease payment includes taxes, common area maintenance and
insurance up to a specified dollar amount per square foot. John A. Edwardson is a passive
investor with an 11.67% ownership interest in the real estate development company that
owns the facility.
• J.R. Hyde, III and his wife together own approximately 13% of HOOPS, L.P., the owner of the
NBA Memphis Grizzlies professional basketball team. Mr. Hyde, through one of his
companies, also is the general partner of the minority limited partner of HOOPS. During
fiscal 2002, FedEx entered into a multi-year, $90 million naming rights agreement with
HOOPS. Under this agreement, FedEx has certain marketing rights, including the right to
name the arena where the Grizzlies play “FedExForum.” Pursuant to a separate agreement
with HOOPS, the City of Memphis and Shelby County, FedEx has agreed to pay $2.5 million
a year for the balance of the twenty-five year term of the agreement if HOOPS terminates its
lease for the arena after 17 years.
• In November 1999, FedEx entered into a multi-year, $205 million naming rights agreement
with the NFL Washington Redskins professional football team. Under this agreement, FedEx
has certain marketing rights, including the right to name the Redskins’ stadium “FedExField.”
In August 2003, Frederick W. Smith acquired an approximate 10% ownership interest in the
Washington Redskins and joined its Leadership Council, or board of directors.
Compensation Committee Interlocks and Insider Participation
Messrs. Greer, Barksdale, Busch, Glass, Manatt and Walsh served on FedEx’s Compensation
Committee during fiscal 2007. Mr. Barksdale, who ceased being a member of the Compensation
Committee on September 25, 2006, is a former officer of FedEx Express (FedEx’s predecessor). His
employment with FedEx Express ended in 1992.
15
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Meetings
During fiscal 2007, the Board of Directors held six regular meetings and two special meetings.
Each director attended at least 75% of the meetings of the Board and any committees on which he or
she served.
Committees
The Board of Directors has a standing Audit Committee, Compensation Committee, Information
Technology Oversight Committee and Nominating & Governance Committee. Each committee’s
written charter is available on the FedEx Web site at http://ir.fedex.com/governance/
committeechar.cfm. Committee memberships are as follows:
Information Technology
Audit Committee Oversight Committee
John A. Edwardson (Chairman) Judith L. Estrin (Chairwoman)
Steven R. Loranger James L. Barksdale
Joshua I. Smith J.R. Hyde, III
Peter S. Willmott Shirley A. Jackson
Nominating &
Compensation Committee Governance Committee
Philip Greer (Chairman) Peter S. Willmott (Chairman)
August A. Busch IV James L. Barksdale
J. Kenneth Glass J. Kenneth Glass
Charles T. Manatt Shirley A. Jackson
Paul S. Walsh
The Board of Directors has approved reconstituting the committees so that, immediately following
the annual meeting, if all of the director nominees are elected, committee memberships will be as
follows:
Information Technology
Audit Committee Oversight Committee
John A. Edwardson (Chairman) Judith L. Estrin (Chairwoman)
Gary W. Loveman James L. Barksdale
Joshua I. Smith J.R. Hyde, III
Peter S. Willmott Shirley A. Jackson
Gary W. Loveman
Nominating &
Compensation Committee Governance Committee
Philip Greer (Chairman) Peter S. Willmott (Chairman)
August A. Busch IV James L. Barksdale
Steven R. Loranger Shirley A. Jackson
Paul S. Walsh Charles T. Manatt
The Audit Committee, which held ten meetings during fiscal 2007, performs the following
functions:
• oversees the independent registered public accounting firm’s qualifications, independence
and performance;
• assists the Board of Directors in its oversight of (i) the integrity of FedEx’s financial
statements; (ii) the effectiveness of FedEx’s disclosure controls and procedures and internal
control over financial reporting; (iii) the performance of the internal auditors; and (iv) FedEx’s
compliance with legal and regulatory requirements; and
16
• preapproves all audit and allowable non-audit services to be provided by FedEx’s
independent registered public accounting firm.
The members of the Audit Committee meet all independence and qualification requirements of the
New York Stock Exchange. The Board of Directors has determined that at least one member of the
Audit Committee, John A. Edwardson, is an audit committee financial expert.
The Compensation Committee, which held six meetings during fiscal 2007, performs the following
functions:
• evaluates the performance and recommends to the independent members of the Board the
compensation of FedEx’s Chairman of the Board, President and Chief Executive Officer;
• discharges the Board’s responsibilities relating to the compensation of executive
management;
• reviews and discusses with management the Compensation Discussion and Analysis and
produces a report recommending whether the Compensation Discussion and Analysis should
be included in the proxy statement; and
• oversees the administration of FedEx’s equity compensation plans and employee benefit and
fringe-benefit plans and programs.
The members of the Compensation Committee meet all independence requirements of the New York
Stock Exchange.
The Information Technology Oversight Committee, which held six meetings during fiscal 2007,
performs the following functions:
• appraises major information technology (“IT”) related projects and technology architecture
decisions;
• ensures that FedEx’s IT programs effectively support FedEx’s business objectives and
strategies; and
• advises FedEx’s senior IT management team and the Board of Directors on IT related
matters.
The Nominating & Governance Committee, which held six meetings during fiscal 2007, performs
the following functions:
• identifies individuals qualified to become Board members;
• recommends to the Board director nominees to be proposed for election at the annual
meeting of stockholders;
• recommends to the Board directors for appointment to Board committees; and
• assists the Board in developing and implementing effective corporate governance,
compliance and ethics programs.
The members of the Nominating & Governance Committee meet all independence requirements of
the New York Stock Exchange.
Attendance at Annual Meeting of Stockholders
FedEx expects all board members to attend annual meetings of stockholders. Each member of
the Board of Directors attended the 2006 annual meeting of stockholders.
17
PROPOSAL 1 – ELECTION OF DIRECTORS
The Board of Directors currently consists of fourteen members. All of FedEx’s directors are
elected at each annual meeting of stockholders and hold office until the next annual meeting of
stockholders and until their successors are duly elected and qualified. Mr. J. Kenneth Glass is retiring
as a director at the annual meeting and is not standing for reelection. The Board proposes that each
of the current directors, other than Mr. Glass, be reelected to the Board. In addition, the Board of
Directors has nominated Gary W. Loveman for election as a director. Each of the directors elected at
this annual meeting will hold office until the annual meeting of stockholders to be held in 2008 and
until his or her successor is duly elected and qualified.
Each nominee has consented to being named in this proxy statement and has agreed to serve if
elected. If a nominee is unable to stand for election, the Board of Directors may either reduce the
number of directors to be elected or select a substitute nominee. If a substitute nominee is selected,
the proxy holders may vote your shares for the substitute nominee.
Under the new majority-voting standard, each of the fourteen director nominees must receive
more votes cast “for” than “against” his or her election in order to be elected to the Board. For more
information, please see “Corporate Governance Guidelines — Majority-Voting Standard for Director
Elections” on page 14.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF
EACH OF THE FOURTEEN NOMINEES.
The following table sets forth, with respect to each nominee, his or her name, age, principal
occupation and employment during at least the past five years, the year in which he or she first
became a director of FedEx (or its predecessor, FedEx Express) and directorships held in other public
companies.
NOMINEES FOR ELECTION TO THE BOARD
Director, Year First Principal Occupation,
Elected as Director Age Business and Directorships
Frederick W. Smith 62 Chairman, President and Chief Executive Officer of FedEx since January
1971 1998; Chairman of FedEx Express since 1975; Chairman, President and
Chief Executive Officer of FedEx Express from 1983 to January 1998;
Chief Executive Officer of FedEx Express from 1977 to January 1998;
President of FedEx Express from 1971 to 1975.
James L. Barksdale 64 Chairman and President, Barksdale Management Corporation, an
1999 investment management company, since April 1999; Managing Partner,
The Barksdale Group, a venture capital firm, since April 1999; President
and Chief Executive Officer of Netscape Communications Corporation, a
provider of software, services and Web site resources to Internet users,
from January 1995 to March 1999; various senior management positions
at FedEx Express from 1979 to 1992, including Executive Vice President
and Chief Operating Officer. Former director of FedEx Express from 1983
to 1991. Director, Sun Microsystems, Inc. and Time Warner Inc.
18
Director, Year First Principal Occupation,
Elected as Director Age Business and Directorships
August A. Busch IV 43 President and Chief Executive Officer of Anheuser-Busch Companies,
2003 Inc., a brewing organization, since December 2006; Vice President and
Group Executive of Anheuser-Busch Companies, Inc. from August 2000 to
November 2006; President of Anheuser-Busch, Inc. since July 2002;
Group Vice President – Marketing of Anheuser-Busch, Inc. from August
2000 to July 2002; Vice President – Marketing & Wholesaler Operations of
Anheuser-Busch, Inc. from November 1996 to August 2000. Director,
Anheuser-Busch Companies, Inc.
John A. Edwardson 58 Chairman and Chief Executive Officer of CDW Corporation, a provider of
2003 technology products and services, since January 2001; Chairman and
Chief Executive Officer of Burns International Services Corporation, a
provider of security services, from 1999 to 2000; President and Chief
Operating Officer of UAL Corporation, an airline, from 1995 to 1998.
Director, CDW Corporation.
Judith L. Estrin 52 President and Chief Executive Officer of Packet Design, LLC, an Internet
1989 technology company, since May 2000; Senior Vice President and Chief
Technology Officer of Cisco Systems, Inc., a networking systems
company, from April 1998 to April 2000; President and Chief Executive
Officer of Precept Software, Inc., a computer software company, from
March 1995 to April 1998. Director, The Walt Disney Company.
Philip Greer 71 Managing Director, Greer Family Consulting and Investments, LLC, an
1974 investment management firm, since April 2002; Senior Managing Director
of Weiss, Peck & Greer L.L.C., an investment management firm, from
1995 to April 2002; General Partner of Weiss, Peck & Greer from 1970 to
1995.
J.R. Hyde, III 64 Chairman of GTx, Inc., a biopharmaceutical company specializing in
1977 serious men’s health issues, since March 2001; Chairman of AutoZone,
Inc., an auto parts retail chain, from March 2005 to June 2007 and from
May 1986 to March 1997; Chief Executive Officer of AutoZone, Inc. from
May 1986 to December 1996; Chairman of Pittco Management, LLC, an
investment management company, since January 1998; President of
Pittco, Inc., an investment company, since April 1989. Director, AutoZone,
Inc. and GTx, Inc.
Shirley A. Jackson 61 President of Rensselaer Polytechnic Institute, a technological research
1999 university, since July 1999; Chairwoman and Commissioner of the United
States Nuclear Regulatory Commission from July 1995 to June 1999;
Commissioner of the United States Nuclear Regulatory Commission from
May 1995 to July 1995. Director, International Business Machines
Corporation, Marathon Oil Corporation, Medtronic, Inc., NYSE Euronext
and Public Service Enterprise Group Incorporated.
19
Director, Year First Principal Occupation,
Elected as Director Age Business and Directorships
Steven R. Loranger 55 Chairman of the Board, President and Chief Executive Officer of ITT
2006 Corporation, a global multi-industry engineering and manufacturing
company, since December 2004; President and Chief Executive Officer of
ITT Corporation from June 2004 to December 2004; Executive Vice
President and Chief Operating Officer of Textron, Inc., a global aircraft,
industrial and finance company, from 2002 to 2004; various executive
positions at Honeywell International Inc. and its predecessor, AlliedSignal,
Inc., a technology and manufacturing company, from 1981 to 2002,
including President and Chief Executive Officer of its Engines, Systems
and Services divisions. Director, ITT Corporation.
Gary W. Loveman 47 Chairman of the Board, Chief Executive Officer and President of Harrah’s
(New Nominee) Entertainment, Inc., a provider of branded gaming entertainment, since
January 2005; Chief Executive Officer and President of Harrah’s
Entertainment, Inc. since January 2003; President of Harrah’s
Entertainment, Inc. since April 2001; various executive positions at
Harrah’s Entertainment, Inc. from May 1998 to April 2001; Associate
Professor of Business Administration, Harvard University Graduate School
of Business Administration from 1994 to 1998. Director, Harrah’s
Entertainment, Inc. and Coach, Inc.
Charles T. Manatt 71 Partner and co-founder of Manatt, Phelps & Phillips, LLP, a diversified law
2004 firm, since 1965; Co-Chair of ManattJones Global Strategies LLC, a global
consulting firm providing international business, government and public
affairs strategies and solutions, since October 2001; U.S. Ambassador to
the Dominican Republic from 1999 to 2001. Former director of FedEx
from 1989 to 1999.
Joshua I. Smith 66 Chairman and Managing Partner, Coaching Group, LLC, a consulting firm,
1989 since June 1998; Vice Chairman and President of iGate, Inc., a
broadband networking company, from June 2000 to June 2001. Director,
The Allstate Corporation and Caterpillar Inc.
Paul S. Walsh 52 Chief Executive Officer of Diageo plc, a beverage company, since
1996 September 2000; Group Chief Operating Officer of Diageo plc from
January 2000 to September 2000; Chairman, President and Chief
Executive Officer of The Pillsbury Company, a wholly owned subsidiary of
Diageo plc, from April 1996 to January 2000; Chief Executive Officer of
The Pillsbury Company from January 1992 to April 1996. Director,
Centrica plc and Diageo plc.
Peter S. Willmott 70 Chairman and Chief Executive Officer of Willmott Services, Inc., a retail
1974 and consulting firm, since June 1989; Interim President and Chief
Executive Officer of Fleming Companies, Inc., a wholesale distributor of
consumable goods, from March 2003 to August 2003 (Fleming
Companies, Inc. filed for reorganization in federal bankruptcy court in April
2003); Chief Executive Officer and President of Zenith Electronics
Corporation, an electronics manufacturing company, from July 1996 to
January 1998; various senior management positions at FedEx Express
from 1974 to 1983, including President and Chief Operating Officer.
20
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee has reviewed and discussed with management the following
Compensation Discussion and Analysis. Based on its review and discussions with management, the
Compensation Committee recommended to the Board of Directors, and the Board approved, that the
Compensation Discussion and Analysis be included in this proxy statement.
Compensation Committee Members
Philip Greer – Chairman
August A. Busch IV
J. Kenneth Glass
Charles T. Manatt
Paul S. Walsh
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy, Objectives and Design
FedEx’s mission is to produce superior financial returns for shareowners by providing high
value-added transportation, supply chain, business and related information services through focused
operating companies that compete collectively, operate independently and manage collaboratively. We
design our executive compensation program to further FedEx’s mission by:
• Retaining and attracting highly qualified and effective executive officers by paying them
competitively;
• Motivating executive officers to contribute to our future success and to build long-term
shareowner value (and rewarding them accordingly) by linking a significant part of their
compensation to the company’s financial and stock price performance, especially long-term
performance; and
• Further aligning executive officer and shareowner interests by encouraging and facilitating
significant ownership of FedEx stock by the officers.
We reward our executive officers for contributing to FedEx’s success for the long-term benefit of
shareowners. Our executive compensation program is designed to pay executives in the top quartile
of our peer group when we achieve long-term top-quartile results compared to the peer group.
FedEx’s compensation program for executive officers consists of four key elements:
• Base salary;
• Cash payments under our annual incentive compensation (“AIC”) program;
• Cash payments under our long-term incentive (“LTI”) compensation program; and
• Long-term equity incentives in the form of stock options and restricted stock.
Executive officers also receive certain other annual compensation, including perquisites and tax
reimbursement payments. In addition, while we do not have any employment agreements with our
executive officers, the officers are entitled to receive certain post-employment and change-of-control
payments and benefits, such as through our pension plans and management retention agreements.
Duty to Retain and Attract. FedEx is widely acknowledged as one of the world’s most admired
and respected companies, and it is our people — our greatest asset — that give us our strong
reputation. Because FedEx operates a global enterprise in a highly competitive business environment,
we compete for talented management with some of the largest companies in the world — in our
industry and in others. Our global recognition and reputation for excellence in management and
21
leadership make our employees attractive targets for other companies, and our key employees are
aggressively recruited. Accordingly, we have a duty to our shareowners to ensure that our overall
compensation program competes well against all types of companies and continues to retain and
attract the right people. Each element of compensation is intended to fulfill this important obligation.
In order to ensure that our compensation remains competitive, we rely on comparison survey
information and design our executive compensation program to target the 75th percentile of
compensation for comparable positions in the comparison surveys. We target our compensation at the
75th percentile to retain and attract highly qualified and effective executives.
For the fiscal 2007 executive compensation review, we considered data published by two major
consulting firms: Towers Perrin and Hewitt Associates. Each consulting firm provided compensation
data on all general industry companies in its respective database with annual revenues in excess of
$10 billion (over 100 companies from each firm), a majority of which are Fortune 200 companies. The
data results provided by each firm are averaged to arrive at blended market compensation data for
general industry executives.
We believe that general industry is the appropriate comparison category because our executives
are aggressively recruited by and from businesses outside FedEx’s industry peer group. In addition,
we do not have many similarly sized industry peers, so an industry peer group would not produce a
meaningful statistical sample. The Compensation Committee of our Board of Directors has reviewed
with its outside consultant (Towers Perrin) alternative criteria for selecting companies for our
benchmarking survey data and concluded that our use of general industry companies with revenues
greater than $10 billion is the most appropriate approach.
When we compare the elements of compensation of our executive officers to the benchmarking
survey data, we group the elements into two categories:
• Annual base salary plus target AIC payout (i.e., assuming achievement of all individual and
corporate objectives), the sum of which we call total cash compensation (“TCC”).
• TCC plus target LTI payout plus long-term equity incentive awards (stock options and
restricted stock) plus tax reimbursement payments on restricted stock awards, the sum of
which we call total direct compensation (“TDC”).
The TDC formula is illustrated below:
SHORT-TERM LONG-TERM
COMPENSATION COMPENSATION
Base Salary + AIC = TCC + LTI + Stock + Restricted = TDC
Cash Options Stock*
Financial Objectives 3-Year
+ Annual Annual
Aggregate Grant Grant
Individual Objectives
EPS Goal
* Includes related tax reimbursement payments.
Other elements of compensation (such as perquisites and retirement benefits) are not included in
our TDC formula because the comparison survey information does not include these items. While
these other elements are not benchmarked against survey data, they are reviewed and approved by
our Compensation Committee. In addition, we consider other factors besides our benchmarking
analysis when determining the appropriate total compensation level for our executive officers,
including the tenure, responsibilities and experience levels of the officers, as well as the compensation
of the officers relative to one another.
The TCC and TDC of our named executive officers are each targeted at the 75th percentile of the
corresponding categories of compensation for comparable positions in the comparison surveys. For
22
benchmarking purposes, we include target AIC and LTI payouts in the TCC and TDC formulas.
Therefore, the actual compensation paid may vary widely from the targeted 75th percentile in the short
term because compensation earned under the AIC and LTI programs is variable and commensurate
with the level of achievement of aggressive pre-established financial performance goals. When we
achieve superior results, we reward our executives accordingly under the terms of these programs.
Conversely, when we fall short of our business objectives, payments under these variable programs
decrease accordingly.
Pay for Performance. Our executive compensation program is intended not only to retain and
attract highly qualified and effective managers, but also to motivate them to substantially contribute to
FedEx’s future success for the long-term benefit of shareowners and reward them for doing so.
Accordingly, we believe that there should be a strong relationship between pay and corporate
performance (both financial results and stock price), and our executive compensation program reflects
this belief. In particular, AIC payments, LTI payments and stock options represent a significant portion
of our executive compensation program, and this variable compensation is “at risk” and directly
dependent upon the achievement of pre-established corporate goals or stock price appreciation.
• AIC payouts are tied to meeting aggressive business plan goals for consolidated pre-tax
income and segment operating profit. For example, even though the company’s fiscal 2007
performance improved year-over-year, AIC payouts for 2007 were lower than for 2006.
• LTI payouts are tied to meeting aggregate earnings-per-share (“EPS”) goals over a
three-fiscal-year period. Our fiscal 2007 LTI payouts were relatively high because the
company’s financial performance has been particularly strong for the past few years. By
contrast, no LTI compensation was paid earlier in the decade (in 2001, 2002 and
2003) because corporate EPS goals were not met for the relevant years.
• Because the exercise price of stock options granted under our equity incentive plans is equal
to the fair market value of our common stock on the date of grant, the options have value to
the executive only if the stock price appreciates.
In summary, our philosophy is to (i) closely align the compensation paid to our executives with the
performance of the company on both a short-term and long-term basis, and (ii) set aggressive
performance goals that support the company’s core long-term financial goals of:
• Growing revenue by 10% per year;
• Achieving a 10%+ operating margin;
• Increasing EPS by 10% to 15% per year;
• Improving cash flow; and
• Increasing returns, such as return on invested capital.
Our executive compensation is thus, in large measure, highly variable and directly linked in the
planning process to the above goals and increases in the FedEx stock price over time.
23
The following chart illustrates for each named executive officer the allocation of fiscal 2007 target
TDC between base salary and incentive and equity-based compensation elements:
Fiscal 2007 Targeted TDC Components
100%
90% 20% 21% 22% 22% 22% 20%
80%
14%
70% 18% 17% 16% 16% 19% Performance Based LTI
60% Performance Based AIC
18% 19% 19% 14%
50% 20% Stock Options
40% 56%
Restricted Stock
23%
30% 23% 24% 25% Base Salary
24%
20%
10% 20% 24%
17% 19% 18%
10%
0%
F. W. Smith A. B. Graf, Jr. D. J. Bronczek T. M. Glenn R. B. Carter D. J. Sullivan
Not only is our executive compensation program weighted towards variable, at-risk pay
components, but we emphasize incentives that are dependent upon long-term corporate performance
and stock price appreciation. These long-term incentives include LTI cash compensation and
equity-based awards (stock options and restricted stock), and they comprise a significant portion of an
executive officer’s total compensation. These incentives are designed to motivate and reward the
executive officers for achieving long-term corporate financial performance goals and maximizing
long-term shareowner value. These incentives also encourage the retention of the executive officers.
The following chart illustrates for each named executive officer the allocation of fiscal 2007 target
TDC between long-term incentives (LTI, stock options and restricted stock, including the related tax
reimbursement payment) and short-term components (base salary and AIC):
Fiscal 2007 Long-Term vs Short-Term Compensation
100%
90%
80%
70% 62% 57%
66% 65% 66%
60% 76%
Long-Term
50%
Short-Term
40%
30%
20% 38% 43%
34% 35% 34%
10% 24%
0%
F. W. Smith A. B. Graf, Jr. D. J. Bronczek T. M. Glenn R. B. Carter D. J. Sullivan
Align Management and Shareowner Interests. We award stock options and restricted stock
to create and maintain a long-term economic stake in the company for the officers, thereby aligning
their interests with the interests of our shareowners.
In addition, as discussed below, payout under our LTI compensation program is dependent upon
achievement of an aggregate EPS goal for a three-fiscal-year period. EPS was selected as the
financial measure for the LTI plan because growth in our EPS strongly correlates to long-term stock
price appreciation.
24
The following chart illustrates the relationship between FedEx’s EPS growth and stock price
appreciation (based on the fiscal year-end stock price and adjusted for stock splits):
$120.00 $7.00
$6.00
$100.00
$5.00
$80.00
$4.00
Earnings Per Share
$60.00
Share Price
$3.00
$40.00
$2.00
$20.00
$1.00
$0.00 $0.00
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Stock Price EPS
In order to encourage significant stock ownership by FedEx’s senior management, including the
named executive officers, and to further align their interests with the interests of our shareowners, the
Board of Directors has adopted a stock ownership goal for senior officers, which is included in
FedEx’s Corporate Governance Guidelines. With respect to our executive officers, the goal is that
within four years after being appointed to his or her position, each officer own FedEx shares valued at
the following multiple of his or her annual base salary:
• 5x for the Chairman of the Board, President and Chief Executive Officer; and
• 3x for the other executive officers.
For purposes of meeting this goal, unvested restricted stock is counted, but unexercised stock
options are not. Until the ownership goal is met, the officer is encouraged to retain (but is not required
to do so) “net profit shares” resulting from the exercise of stock options. Net profit shares are the
shares remaining after payment of the option exercise price and taxes owed upon the exercise of
options.
As of July 30, 2007, each executive officer exceeded the stock ownership goal.
25
Role of the Compensation Committee, Its Compensation Consultant and the Chairman of the
Board, President and Chief Executive Officer
Our Board of Directors is responsible for the compensation of our executive management. The
purpose of the Board’s Compensation Committee, which is composed solely of independent directors,
is to help discharge this responsibility by, among other things:
• Reviewing and discussing with management the factors underlying our compensation policies
and decisions, including overall compensation objectives;
• Reviewing and approving all company goals and objectives (both financial and non-financial)
relevant to the compensation of the Chairman of the Board, President and Chief Executive
Officer;
• Evaluating, together with the other independent directors, the performance of the Chairman
of the Board, President and Chief Executive Officer in light of these goals and objectives and
the quality and effectiveness of his leadership;
• Recommending to the Board for approval by the independent directors each element of the
compensation of the Chairman of the Board, President and Chief Executive Officer;
• Reviewing the performance evaluations of all other members of executive management (the
Chairman of the Board, President and Chief Executive Officer is responsible for the
performance evaluations of the non-CEO executive officers); and
• Reviewing and approving each element of the compensation, as well as the terms and
conditions of employment, of these other members of executive management.
In furtherance of its responsibility, the Compensation Committee has retained an outside
consultant (Towers Perrin) to assist the Committee in evaluating FedEx’s executive compensation. The
consultant reports directly to the Committee, and the Committee has determined the consultant to be
independent from FedEx. The consultant attends Committee meetings, reviews Committee materials
and provides advice to the Committee upon its request. For example, the consultant updates the
Committee on trends and issues in executive compensation and comments on the competitiveness
and reasonableness of FedEx’s executive compensation program. The consultant also assists the
Committee in the development and review of FedEx’s AIC and LTI compensation programs, including
commenting on performance measures and the goal-setting process.
The Chairman of the Board, President and Chief Executive Officer, who attends most meetings of
the Compensation Committee, assists the Committee in determining the compensation of all other
executive officers by, among other things:
• Setting the base salaries of the other executive officers within limits established by the
Committee;
• Establishing annual individual performance objectives for the other executive officers and
evaluating their performance against such objectives (the Committee reviews these
performance evaluations); and
• Making recommendations, from time to time, for special stock option and restricted stock
grants (e.g., for motivational or retention purposes) to other executive officers.
The other executive officers do not have a role in determining their own compensation, other than
discussing their annual individual performance objectives with the Chairman of the Board, President
and Chief Executive Officer.
26
Description of Compensation Elements
Base Salary
As discussed above, we believe that a significant portion of executive compensation should be
based upon the company’s financial and stock price performance — that is, “at risk.” Through our
approach to base salary, we attempt to strike an appropriate balance. Accordingly, the annual base
salaries of the named executive officers are targeted at the 50th percentile for comparable positions in
the two comparison surveys described above. Targeting the median level for base salary allows us to
allocate a larger portion of total compensation to variable performance-based compensation elements
(since TDC is targeted at the 75th percentile), but still provide enough fixed pay in cash to retain and
attract highly marketable executives in a competitive market for executive talent.
The base salary of each named executive officer is reviewed and adjusted at least annually to
reflect, among other things:
• varying levels of experience and responsibilities;
• individual competencies, skills and contributions;
• executive compensation survey data for base salaries for comparable positions;
• the internal salary ranges for the officer’s level;
• individual performance; and
• internal equity issues.
The independent members of the Board, upon the recommendation of the Compensation
Committee, approve any changes to Mr. Smith’s base salary. Mr. Smith approves any changes to the
base salaries of the other named executive officers within limits established by the Compensation
Committee.
Chairman of the Board, President and Chief Executive Officer. Effective June 2006, the
independent Board members approved an ad hoc base salary increase of 2% for Mr. Smith based
upon CEO compensation market data. Effective July 2006, the independent Board members approved
an annual increase of 3.5% to Mr. Smith’s base salary.
Other Named Executive Officers. Effective June 2006, Mr. Graf received an ad hoc base salary
increase of 8% based upon CFO total compensation market data, and Messrs. Carter and Glenn
each received ad hoc base salary increases of 3% based upon their increased responsibilities.
Effective July 2006, each non-CEO named executive officer received an annual base salary increase
of 3.5%.
Cash Payments Under Annual Incentive Compensation Plans
Our AIC program provides a cash bonus opportunity to our employees, including the named
executive officers, at the conclusion of each fiscal year based upon the achievement of company
financial and individual performance objectives established at the beginning of the year, as illustrated
below:
Company Individual
Annual Bonus Target
x x Performance + Performance = AIC Payout
Base Salary Percentage
Factor Factor
The AIC program reflects our belief that a significant portion of an executive officer’s
compensation should be “at risk” and directly dependent upon the achievement of pre-established
performance goals. Target AIC payouts are established as a percentage of the executive officer’s base
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salary. Payouts above target levels are based upon above-target achievement of company financial
performance objectives, rather than individual objectives; accordingly, the executive officer receives
above-target payouts if and only if the company exceeds its financial performance goals. The
maximum AIC payout represents three times the portion of the target payout that is based upon the
achievement of company financial performance objectives (plus the portion of the target payout that is
based upon the achievement of individual performance objectives).
The company performance factor is a pre-established multiplier that corresponds, on a sliding
scale, to the percentage achievement of the applicable company financial performance target
objective. The multiplier matrix for company performance factors is designed so that if the financial
performance threshold is achieved but is less than target, the multiplier decreases exponentially based
on the percentage achievement of the target objective. On the other hand, if the company exceeds its
financial performance target objective, the multiplier increases exponentially (up to the maximum, as
described above) based on the percentage that such goal is exceeded.
The fiscal 2007 AIC target payouts for the named executive officers, as a percentage of base
salary, were as follows:
Named Executive Officer Target Payout
F.W. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130%
A.B. Graf, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90%
D.J. Bronczek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
T.M. Glenn. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90%
R.B. Carter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90%
D.J. Sullivan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80%
The following table illustrates for our named executive officers the fiscal 2007 AIC formulas and
total AIC payout opportunities (as a percentage of the target payout described above):
Allocation of Goals
Individual Consolidated Segment Payout
Objectives Pre-Tax Profit Operating Profit Opportunity
+ + =
Target Maximum Target Maximum Target Maximum Target Maximum
FedEx Corporation CEO . . . . . . – – 100% 300% – – 100% 300%
FedEx Corporation EVPs. . . . . . 30% 30% 70% 210% – – 100% 240%
FedEx Express CEO . . . . . . . . . 30% 30% 40% 120% 30% 90% 100% 240%
FedEx Ground CEO . . . . . . . . . . 30% 30% 40% 120% 30% 90% 100% 240%
Chairman of the Board, President and Chief Executive Officer. Mr. Smith’s AIC payout is tied to
the achievement of corporate objectives for consolidated pre-tax income for the fiscal year, which are
based on the corporate business plan for the year. Mr. Smith’s threshold (minimum) AIC payout is
zero. His target AIC payout is set as a percentage of his base salary, and his maximum AIC payout is
set as a multiple of the target payout. The independent members of the Board of Directors, upon the
recommendation of the Compensation Committee, approve these percentages. The actual AIC payout
ranges, on a sliding scale, from the threshold to the maximum based upon the performance of the
company against the consolidated pre-tax income objectives.
In addition, the independent Board members, upon the recommendation of the Compensation
Committee, may adjust this amount upward or downward based on their annual evaluation of
Mr. Smith’s performance, including the quality and effectiveness of his leadership and the following
corporate performance measures:
• FedEx’s stock price performance relative to the Standard & Poor’s 500 Composite Index, the
Dow Jones Transportation Average and the Dow Jones Industrial Average;
• FedEx’s revenue and operating income growth relative to competitors;
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• FedEx’s cash flow;
• FedEx’s return on invested capital;
• FedEx’s U.S. revenue market share; and
• FedEx’s reputation rankings by various publications and surveys.
None of these factors is given any particular weight in determining whether to adjust Mr. Smith’s
bonus amount.
Non-CEO Named Executive Officers. FedEx Corporation executive vice presidents, including
Messrs. Graf, Glenn and Carter, participate in the AIC plan for corporate employees, and presidents
and chief executive officers of FedEx operating segments, including Messrs. Bronczek and Sullivan
(until his retirement), participate in the AIC plan for their respective segment. Under these plans, the
AIC payout is tied to the achievement of (i) individual objectives established at the beginning of the
fiscal year for each executive (30% of the target payout), and (ii) company objectives for financial
performance for the fiscal year (70% of the target payout). The threshold (minimum) AIC payout is
zero. The target AIC payout is set as a percentage of the executive’s base salary, and the maximum
AIC payout is set as a multiple of the target payout (the Compensation Committee approves these
percentages). The actual AIC payout ranges, on a sliding scale, from the threshold to the maximum
based upon the performance of the individual and the company against the objectives.
The achievement level of each non-CEO named executive officer’s individual objectives was
based on Mr. Smith’s evaluation at the conclusion of the fiscal year, which is reviewed by the
Compensation Committee. The company objectives for financial performance are based upon the
corporate business plan for the year.
Discussion of Individual and Company Objectives. Individual performance objectives for the
non-CEO named executive officers vary by management level and by operating segment and include
(but are not limited to):
• Provide leadership to support the achievement of financial goals;
• Support and develop key strategic initiatives;
• Maintain the highest standards of corporate governance; and
• Support diversity for our customers, our employees and our community.
Individual performance objectives are designed to further the company’s business objectives.
Achievement of individual performance objectives is generally within each officer’s control or scope of
responsibility, and the objectives are intended to be achieved with an appropriate level of effort and
effective leadership by the officer.
As an example of our commitment to compete collectively and manage collaboratively, the AIC
payout for all named executive officers, including the operating segment CEOs, is tied to the
performance of FedEx as a whole — consolidated pre-tax income. We use consolidated pre-tax
income as the only corporate performance measure for FedEx Corporation employees, including
Messrs. Smith, Graf, Glenn and Carter, because corporate employees have broad responsibilities for
financing and other non-operating decisions and are held accountable for those decisions.
As an example of our commitment to operate independently, the fiscal 2007 AIC payout for
operating segment CEOs, including Messrs. Bronczek and Sullivan, was tied in part to the operating
income of their respective operating segments. We measured segment performance against operating
income objectives because segment operating income is largely controllable by the segment CEO.
While the fiscal 2007 operating segment AIC plans had both consolidated pre-tax income (40% of
the target payout) and the respective segment’s operating income (30% of the target payout) as
29
company performance measures, consolidated pre-tax income will be the only company performance
measure for all fiscal 2008 AIC plans, including the operating segment plans. This change reflects our
desire to focus all of our executives and employees on the performance of FedEx as a whole given
our uncertainty about the strength of the economy during fiscal 2008.
AIC objectives for company financial performance are based upon our business plan for the fiscal
year, which is reviewed and approved by the Board of Directors. Consistent with our long-term focus,
we measure performance against our business plan, rather than a stipulated growth rate or an
average of growth rates from prior years, to account for short-term economic and competitive
conditions and anticipated strategic investments that may have short-term profit implications. We
address year-over-year improvement targets through our LTI compensation plans, as discussed below.
Our business planning process is extremely thorough and sets aggressive goals that are intended to
result in superior company performance. Accordingly, the AIC program targets strong financial
performance.
Fiscal 2007 AIC Performance and Payouts. The following table presents target and actual
FedEx consolidated pre-tax income and FedEx Express and FedEx Ground segment operating
income for fiscal 2007 (in millions):
Performance Measure Target Actual
Consolidated Pre-Tax Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,345 $3,215
FedEx Express Segment Operating Income . . . . . . . . . . . . . . . . . 2,092 1,955
FedEx Ground Segment Operating Income. . . . . . . . . . . . . . . . . . 815 813
Based upon the company’s actual performance and each officer’s achievement of individual
performance objectives, payouts to the named executive officers under the fiscal 2007 AIC plans were
as follows (compared to the target payouts):
Target Actual
Named Executive Officer AIC Payout AIC Payout
F.W. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,819,802 $1,397,851
A.B. Graf, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 785,030 675,911
D.J. Bronczek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 910,872 703,193
T.M. Glenn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697,550 588,035
R.B. Carter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640,516 528,426
D.J. Sullivan* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421,047 383,153
* Mr. Sullivan, who retired on December 31, 2006, received a prorated payout based on the
proportion of the 2007 fiscal year during which he was employed.
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Cash Payments Under Long-Term Incentive Compensation Program
The LTI program provides a long-term cash payment opportunity to members of management,
including the named executive officers, based upon achievement of aggregate EPS goals for the
preceding three-fiscal-year period. The LTI plan design provides for payouts that correspond to
specific EPS goals established by the Board of Directors. The EPS goals represent total growth in
EPS (over a base year) for the three-year term of the LTI plan.
The following chart illustrates the relationship between EPS growth and payout:
LTI Payout Opportunity
(as a percentage of target)
150%
125%
100%
75%
50%
25%
0%
5.0% 7.5% 10.0% 12.5% 15.0%
Three-Year Average Annual EPS Growth
Over its twelve-year history, the LTI program has paid out at an average of 101% of target. As
illustrated by the above chart, the LTI program provides for target payouts if the three-year average
annual EPS growth rate is 12.5% and maximum payouts (equal to 150% of the target payouts) if the
growth rate is 15% or higher. Our LTI target three-year average annual EPS growth rate has always
been 12.5%, which substantially exceeds the average annual EPS growth rate over the past ten years
of the companies in the comparison surveys discussed previously. We set an aggressive target growth
rate to motivate management to achieve exceptional results. On the other hand, we believe that a
compensation program that frequently fails to pay out loses its motivating power. Accordingly, we still
make payouts under the LTI program for below-target achievement. No LTI payment is made,
however, unless the three-year average annual EPS growth is at least 5%.
Fiscal 2007 LTI Performance and Payouts. In July 2007, maximum payouts were awarded under
the LTI program to all eligible participants, including the named executive officers, because FedEx’s
performance significantly exceeded the aggregate EPS target for the three-year period ended May 31,
2007. In particular, aggregate EPS for the period was $17.03, compared to the plan’s aggregate EPS
target of $12.70.
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The following table sets forth for each named executive officer the target and actual payouts
under the FY2005-2007 LTI plan, which was established by the Board of Directors in 2004:
Named Executive Officer Target LTI Payout Actual LTI Payout
F.W. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,250,000 $3,375,000
A.B. Graf, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 1,125,000
D.J. Bronczek. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,500,000
T.M. Glenn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 1,125,000
R.B. Carter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 1,125,000
D.J. Sullivan* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516,000 774,000
* Mr. Sullivan, who retired on December 31, 2006, received a prorated payout based on the
proportion of the three-year period during which he was employed.
LTI Payout Opportunities. The Board of Directors has established LTI plans for the
three-fiscal-year periods 2006 through 2008 and 2007 through 2009, providing cash payment
opportunities for fiscal 2008 and 2009, respectively, if certain EPS goals are achieved with
respect to those periods. The following table sets forth the aggregate EPS targets under these
two plans:
Performance Period Aggregate EPS Target
FY2006-FY2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18.00
FY2007-FY2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.24
The following table sets forth the threshold (minimum), target and maximum payouts for the
named executive officers under these two plans:
Estimated Future Payouts
Performance Threshold Target Maximum
Name Period ($) ($) ($)
F.W. Smith . . . . . . . . . . . . . . . . . . . FY2006-FY2008 625,000 2,500,000 3,750,000
FY2007-FY2009 875,000 3,500,000 5,250,000
A.B. Graf, Jr. . . . . . . . . . . . . . . . . . FY2006-FY2008 187,500 750,000 1,125,000
FY2007-FY2009 300,000 1,200,000 1,800,000
D.J. Bronczek . . . . . . . . . . . . . . . . . FY2006-FY2008 250,000 1,000,000 1,500,000
FY2007-FY2009 375,000 1,500,000 2,250,000
T.M. Glenn . . . . . . . . . . . . . . . . . . . FY2006-FY2008 187,500 750,000 1,125,000
FY2007-FY2009 300,000 1,200,000 1,800,000
R.B. Carter . . . . . . . . . . . . . . . . . . . FY2006-FY2008 187,500 750,000 1,125,000
FY2007-FY2009 300,000 1,200,000 1,800,000
D. J. Sullivan* . . . . . . . . . . . . . . . . . FY2006-FY2008 92,167 368,666 553,000
FY2007-FY2009 48,333 193,333 290,000
* Mr. Sullivan, who retired on December 31, 2006, is eligible for payouts under each of these
plans based on the proportion of the applicable three-fiscal-year period during which he was
employed.
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Long-Term Equity Incentives — Stock Options and Restricted Stock
Our equity-based compensation, which is provided in the form of stock options and restricted
stock, is intended to align the interests of executive officers with shareowner interests and ensure that
the executive officers have a continuing stake in the long-term success of FedEx. The equity awards
encourage and facilitate significant ownership of FedEx stock by executive officers, which creates a
direct link between compensation and long-term shareowner return.
Amount. We include the total value of all equity-based awards (including tax reimbursement
payments for restricted stock awards, as discussed below) in our calculation of TDC, and we target
the TDC of the named executive officers at the 75th percentile of the TDC for comparable positions in
the comparison surveys. Accordingly, the number of stock options and restricted shares awarded
varies from year to year. For example, over the past few years, as our stock price and the value of our
stock option awards have increased, the number of options awarded to our executives has decreased.
In determining the number of option shares and shares of restricted stock to award to executive
officers each year, the Compensation Committee also considers the officer’s position and level of
responsibility, the total number of shares then available to be granted and potential shareowner
dilution. Other factors that the Compensation Committee may consider with respect to stock option
and restricted stock awards include the promotion of an officer to a more senior position or the desire
to retain a valued executive or recognize a particular officer’s contributions. None of these factors is
given any particular weight and the specific factors used may vary among individual executives.
Timing. In awarding equity-based compensation, we do not consider, nor have we ever
considered, the price of FedEx’s common stock (except to determine the value of the awards when
calculating TDC for benchmarking purposes, as discussed above) or the timing of the release of
material, non-public information about the company. Stock option and restricted stock awards are
generally made on an annual basis to executive officers. For the past two years, the grant date for the
annual grant has been the first business day of our fiscal year, which begins in June, and the
Compensation Committee approved the annual grant at a regularly scheduled meeting that occurred
in late May.
When the Compensation Committee approves a special grant outside of the annual-grant
framework, such grants are made at a regularly scheduled meeting and the grant date of the awards
is the approval date or the next business day, if the meeting does not fall on a business day. If the
grant is made in connection with the promotion of an individual or the election of an officer, the grant
date may be the effective date of the individual’s promotion or the officer’s election, if such effective
date is after the approval date.
Pricing. The exercise price of stock options granted under our equity incentive plans is equal to
the fair market value of FedEx’s common stock on the date of grant. This design encourages
executive officers to focus on the enhancement of long-term shareowner value. Under the terms of
our equity incentive plans, the fair market value on the grant date is defined as the average of the
high and low trading prices of FedEx’s stock on the New York Stock Exchange on that day. We
believe this methodology is the most equitable method for determining the exercise price of our stock
option awards given the intra-day price volatility often shown by our stock.
Vesting. Stock options and restricted stock granted to executive officers generally vest ratably
over four years beginning on the first anniversary of the grant date. This four-year vesting period is
intended to further encourage the retention of the executive officers, since unvested stock options and
restricted stock are forfeited upon termination of the officer’s employment for any reason other than
death, permanent disability or retirement. In addition, unvested stock options granted on or after
June 1, 2006 terminate upon the officer’s retirement.
Tax Reimbursement Payments for Restricted Stock Awards. FedEx pays the taxes resulting
from a restricted stock award on behalf of the recipient. This prevents the need for the officer to sell a
33
portion of a stock award to pay the corresponding tax obligation. As described above, the
Compensation Committee considers the amount of this “tax gross-up” in its determination of the
recipient’s TDC for purposes of our benchmarking analysis. Therefore, absent the provision to gross
up the taxes on these awards, the officers would receive a larger number of shares in each award.
Voting and Dividend Rights on Restricted Stock. Holders of restricted shares are entitled to vote
and receive any dividends on such shares. The dividend rights are included in the computation of the
value of the restricted stock award for purposes of determining the recipient’s total compensation.
Fiscal 2007 Awards. On June 1, 2006, the named executive officers were granted stock option
and restricted stock awards as follows:
Number of Number of Shares
Name Stock Options of Restricted Stock
F.W. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 –
A.B. Graf, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,155 6,145
D.J. Bronczek. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,540 7,901
T.M. Glenn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,655 6,145
R.B. Carter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,655 6,145
D.J. Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,770(1) 5,267(2)
(1) These options were forfeited upon Mr. Sullivan’s retirement.
(2) In connection with Mr. Sullivan’s retirement, the restrictions applicable to these shares lapsed
on June 1, 2007, in accordance with the terms of FedEx’s restricted stock plans.
As in previous years, at the request of Mr. Smith and in light of his significant stock ownership,
the Compensation Committee did not award him any restricted stock. Instead, his equity awards were
in the form of stock options, which have value only as the stock price increases from the date of grant.
Other Elements of Executive Compensation
Perquisites, Tax Reimbursement Payments and Other Annual Compensation. FedEx’s named
executive officers receive certain other annual compensation, including:
• certain perquisites and other personal benefits, such as personal use of corporate aircraft,
security services and equipment, tax return preparation and financial counseling services
and physical examinations;
• umbrella insurance, group term life insurance and matching 401(k) contributions; and
• tax reimbursement payments relating to restricted stock awards, certain business-related
use of corporate aircraft and certain perquisites, umbrella insurance premiums and
benefits accrued under our supplemental non-tax-qualified pension plan using the cash
balance formula.
The Compensation Committee reviews and approves each of these elements of compensation,
and all of the independent directors approve each element as it relates to Mr. Smith. The Committee
also reviews and approves FedEx’s policies and procedures regarding perquisites and other personal
benefits and tax reimbursement payments, including:
• FedEx’s written policy setting forth guidelines and procedures regarding personal use of
FedEx corporate aircraft; and
• FedEx’s executive security procedures, which (i) prescribe the level of personal security to be
provided to the named executive officers, and (ii) have been assessed by an independent
security consulting firm and deemed necessary for the protection of the officers.
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We believe this other compensation serves the beneficial purpose of retaining and attracting the
executives and allowing them to work more productively. The Compensation Committee reviews the
type and amount of this other compensation in light of best practices to ensure they remain
appropriate and consistent with the overall executive compensation program. As an example,
during fiscal 2007 the Committee amended the company’s policy on personal use of corporate
aircraft to require the officers to reimburse FedEx for substantially all of the incremental cost to
FedEx of such usage.
Post-Employment Compensation. While none of FedEx’s named executive officers has an
employment agreement, they are entitled to receive certain payments and benefits upon termination of
employment or a change of control of FedEx, including:
• Retirement benefits under FedEx’s pension plans, including a tax-qualified, defined benefit
pension plan called the FedEx Corporation Employees’ Pension Plan and a supplemental
non-tax-qualified plan called the FedEx Corporation Retirement Parity Pension Plan — which
is designed generally to provide to the executives the additional benefits that would be paid
under the tax-qualified plan but for certain benefit limits contained in the tax laws;
• Accelerated vesting of restricted stock upon the executive’s retirement (at or after age 60),
death or permanent disability or a change of control of FedEx;
• Accelerated vesting of stock options upon the executive’s death or permanent disability or a
change of control of FedEx; and
• Lump sum cash payments and post-employment insurance coverage under the executives’
Management Retention Agreements (“MRAs”) upon a qualifying termination of the executive
after a change of control of FedEx.
The Compensation Committee approves and recommends Board approval of all plans,
agreements and arrangements that provide for these payments and benefits and reviews this
post-employment compensation in light of best practices to ensure it remains appropriate. We believe
this potential compensation serves the beneficial purpose of retaining and attracting the executives by
providing them with a measure of financial security and stability. In addition, the MRAs are intended to
secure the executives’ continued services in the event of any threat or occurrence of a change of
control, which further aligns their interests with those of our shareowners when evaluating any such
potential transaction.
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code (as recently clarified by IRS Notice 2007-49) limits
the income tax deduction by FedEx for compensation paid to the Chief Executive Officer and the three
other highest-paid executive officers (other than the Chief Financial Officer) to $1,000,000 per year,
unless the compensation is “qualified performance-based compensation” or qualifies under certain
other exceptions.
• Mr. Smith’s base salary is not designed to meet the requirements of Section 162(m) and,
therefore, is subject to the $1,000,000 deductibility limit.
• FedEx’s equity compensation plans satisfy the requirements of Section 162(m) with respect
to stock options, but not with respect to restricted stock awards. Accordingly, compensation
recognized by the four highest-paid executive officers (excluding Mr. Graf) in connection with
stock options is fully deductible, but compensation with respect to restricted stock awards is
subject to the $1,000,000 deductibility limit.
• FedEx’s AIC and LTI compensation plans do not meet all of the conditions for qualification
under Section 162(m). Compensation received by the four highest paid executive officers
(excluding Mr. Graf) under each of these plans is subject, therefore, to the $1,000,000
deductibility limit.
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We do not require all of our compensation programs to be fully deductible under Section 162(m)
because doing so would restrict our discretion and flexibility in designing competitive compensation
programs to promote varying corporate goals. We believe that our Board of Directors should be free
to make compensation decisions to further and promote the best interests of our shareowners, rather
than to qualify for corporate tax deductions. In fiscal 2007, we incurred approximately $5 million of
additional tax expense as a result of the Section 162(m) deductibility limit for compensation paid to the
Chief Executive Officer and the three other highest-paid executive officers (other than Mr. Graf).
EXECUTIVE COMPENSATION
In this section we provide certain tabular and narrative information regarding the compensation of
our principal executive and financial officers, our three other most highly compensated executive
officers and Daniel J. Sullivan (who retired as President and Chief Executive Officer of FedEx Ground
on December 31, 2006) for the fiscal year ended May 31, 2007. For additional information regarding
compensation of the named executive officers, see “Compensation Discussion and Analysis” on
page 21.
Summary Compensation Table
Change in
Pension
Value and
Nonqualified
Non-Equity Deferred
Stock Option Incentive Plan Compensation All Other
Salary Awards Awards Compensation Earnings Compensation Total
Name and Principal Position Year ($) ($)(1) ($)(1) ($)(2) ($)(3) ($)(4) ($)
Frederick W. Smith. . . . . . . . . . . . . 2007 1,393,931 – 5,865,196 4,772,851 4,013,612 969,764 17,015,354
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
Alan B. Graf, Jr. . . . . . . . . . . . . . . 2007 869,798 1,144,247 952,266 1,800,911 1,716,644 646,906 7,130,772
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
David J. Bronczek . . . . . . . . . . . . . 2007 908,305 1,315,507 1,131,664 2,203,193 2,332,755 668,600 8,560,024
President and Chief Executive
Officer – FedEx Express
T. Michael Glenn . . . . . . . . . . . . . . 2007 772,872 933,500 852,551 1,713,035 1,438,519 540,942 6,251,419
Executive Vice President,
Market Development and
Corporate Communications
Robert B. Carter . . . . . . . . . . . . . . 2007 709,678 933,500 852,551 1,653,426 780,422 531,692 5,461,269
Executive Vice President,
FedEx Information Services
and Chief Information Officer
Daniel J. Sullivan(5) . . . . . . . . . . . . 2007 523,766 2,202,561 803,738 1,157,153 1,061,282 889,960 6,638,460
Former President and Chief
Executive Officer – FedEx Ground
(1) The amounts included in these columns reflect the value of restricted stock and option awards
that were recognized as an expense for financial statement reporting purposes in fiscal 2007,
calculated pursuant to Statement of Financial Accounting Standards (“FAS”) 123R, “Share-Based
Payment,” excluding, however, any estimate of forfeitures. Accordingly, the columns include
amounts relating to awards granted during and prior to fiscal 2007. The entire value of any stock
award granted on or after June 1, 2006 (the date of our adoption of FAS 123R) to a
retirement-eligible named executive officer is recognized as an expense in the year of grant.
Otherwise, the expense is recognized over the shorter of the four-year vesting period or the
period ending at the point in the vesting period when the officer becomes eligible for retirement.
36
The following table sets forth each stock and option award represented in these columns and the
amount included for each such award. Assumptions used in the calculation of these amounts are
included in note 9 to the audited consolidated financial statements included in our annual report
on Form 10-K for the fiscal year ended May 31, 2007.
Stock Awards Option Awards
Total Number
Total of Shares
Number of Amount Underlying Amount
Shares Included Options Included
Date of Awarded in Fiscal 2007 Date of Awarded in Fiscal 2007
Name Award (#) ($) Award (#) ($)
F.W. Smith . . . . . . . . . . . – – – 6/3/2002 375,000 13,179
6/2/2003 250,000 1,095,088
6/1/2004 325,000 1,560,600
6/1/2005 250,000 1,593,653
6/1/2006 200,000 1,602,676
5,865,196
A.B. Graf, Jr. . . . . . . . . . 8/14/2002 9,000 45,402 6/3/2002 45,000 1,347
8/14/2003 7,443 199,986 6/2/2003 65,000 264,244
7/12/2004 6,145 196,315 6/1/2004 38,250 189,446
6/1/2005 6,145 220,836 6/1/2005 34,425 225,532
6/1/2006 6,145 481,708 6/1/2006 33,155 271,697
1,144,247 952,266
D.J. Bronczek . . . . . . . . . 8/14/2002 12,000 60,536 6/3/2002 60,000 1,885
8/14/2003 9,924 266,648 6/2/2003 85,000 354,065
7/12/2004 7,901 252,414 6/1/2004 51,000 250,421
6/1/2005 7,901 283,942 6/1/2005 45,900 298,362
6/1/2006 7,901 451,967 6/1/2006 27,540 226,931
1,315,507 1,131,664
T.M. Glenn . . . . . . . . . . . 8/14/2002 9,000 45,402 6/3/2002 45,000 1,347
8/14/2003 7,443 199,986 6/2/2003 65,000 264,244
7/12/2004 6,145 196,315 6/1/2004 38,250 189,446
6/1/2005 6,145 220,836 6/1/2005 34,425 225,532
6/1/2006 6,145 270,961 6/1/2006 20,655 171,982
933,500 852,551
R.B. Carter . . . . . . . . . . . 8/14/2002 9,000 45,402 6/3/2002 45,000 1,347
8/14/2003 7,443 199,986 6/2/2003 65,000 264,244
7/12/2004 6,145 196,315 6/1/2004 38,250 189,446
6/1/2005 6,145 220,836 6/1/2005 34,425 225,532
6/1/2006 6,145 270,961 6/1/2006 20,655 171,982
933,500 852,551
D.J. Sullivan* . . . . . . . . . 8/14/2002 8,000 42,022 6/3/2002 30,000 809
8/14/2003 6,616 231,365 6/2/2003 37,500 141,511
7/12/2004 5,267 366,073 6/1/2004 25,500 231,106
6/1/2005 5,267 592,988 6/1/2005 22,950 430,312
6/1/2006 5,267 970,113 6/1/2006 13,770 0
2,202,561 803,738
* The entire June 1, 2006 option award to Mr. Sullivan was forfeited upon his retirement. All other
previously awarded unvested stock options held by Mr. Sullivan, however, will continue to vest
according to the terms of the award after his retirement. The expense associated with those awards,
37
however, was fully recognized in fiscal 2007. In addition, the restrictions applicable to Mr. Sullivan’s
June 1, 2006 stock award lapsed on June 1, 2007, and the restrictions applicable to Mr. Sullivan’s
other shares of restricted stock lapsed upon his retirement.
(2) Reflects cash payouts under FedEx’s fiscal 2007 annual and FY05-FY07 long-term incentive
compensation plans, as follows (see pages 27-32 for further discussion of these plans and payouts):
FY07 FY05-FY07 Total Non-Equity Incentive
Name AIC Payout LTI Payout Plan Compensation
F.W. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . $1,397,851 $3,375,000 $4,772,851
A.B. Graf, Jr. . . . . . . . . . . . . . . . . . . . . . . . . 675,911 1,125,000 1,800,911
D.J. Bronczek . . . . . . . . . . . . . . . . . . . . . . . 703,193 1,500,000 2,203,193
T.M. Glenn . . . . . . . . . . . . . . . . . . . . . . . . . . 588,035 1,125,000 1,713,035
R.B. Carter . . . . . . . . . . . . . . . . . . . . . . . . . 528,426 1,125,000 1,653,426
D.J. Sullivan* . . . . . . . . . . . . . . . . . . . . . . . . 383,153 774,000 1,157,153
* Mr. Sullivan, who retired on December 31, 2006, received payouts under each of these plans
based on the proportion of the applicable period during which he was employed.
(3) Reflects the actuarial increase in the present value of the named executive officer’s benefits under
all pension plans sponsored by FedEx. These amounts were determined using assumptions
(e.g., for interest rates and mortality rates) consistent with those used in the audited consolidated
financial statements included in our annual report on Form 10-K for the fiscal year ended May 31,
2007. The amount shown for Mr. Sullivan reflects the actuarial increase in the present value of his
pension plan benefits through December 31, 2006, the date of his retirement.
(4) Includes:
• the aggregate incremental cost to FedEx of providing perquisites and other personal benefits;
• umbrella insurance premiums paid on the officer’s behalf;
• group term life insurance premiums paid by FedEx (and with respect to Mr. Sullivan,
long-term disability insurance premiums paid by FedEx);
• company matching contributions under 401(k) plans; and
• tax reimbursement payments relating to restricted stock awards, certain business-related use
of corporate aircraft and certain perquisites, umbrella insurance premiums and benefits
accrued under our supplemental non-tax-qualified pension plan using the cash balance
formula.
The following table shows the amounts included for each such item:
Perquisites Company
and Other Umbrella Life Contributions Tax
Personal Insurance Insurance Under Reimbursement
Name Benefits Premiums Premiums 401(k) Plans Payments Other Total
F.W. Smith . . . . . . . . . $797,354 $2,875 $2,520 $ – $167,015 $ – $969,764
A.B. Graf, Jr. . . . . . . . 205,460 2,875 2,520 500 435,551 – 646,906
D.J. Bronczek . . . . . . . 113,165 2,875 2,520 500 549,540 – 668,600
T.M. Glenn . . . . . . . . . 91,063 2,875 2,520 500 443,984 – 540,942
R.B. Carter . . . . . . . . . 103,069 2,875 2,520 500 422,728 – 531,692
D.J. Sullivan . . . . . . . . 103,852 2,875 1,465(a) – 437,462 344,306(b) 889,960
(a) Includes $987 of group term life insurance premiums and $478 of long-term disability
insurance premiums.
(b) Includes $181,610 of compensation for services rendered under the consulting agreement
referred to in note 5 below, which is discussed further under the caption “Consulting
Agreement and Non-Competition Agreement with Daniel J. Sullivan — Consulting Agreement”
38
on page 56. Also includes $103,703 of compensation representing (i) the aggregate
incremental cost of retirement gifts for Mr. Sullivan ($60,490), and (ii) related tax
reimbursement payments ($43,213). Also includes $58,993 of unused vacation pay.
During fiscal 2007, FedEx provided the following perquisites and other personal benefits to
the named executive officers:
• Personal use of corporate aircraft: FedEx maintains a fleet of corporate aircraft that
is used primarily for business travel by FedEx employees. FedEx has a written policy that
sets forth guidelines and procedures regarding personal use of FedEx corporate aircraft.
Effective March 1, 2007, the policy requires officers to pay FedEx two times the cost of
fuel for personal trips, plus applicable passenger ticket taxes and fees. These payments
are intended to approximate the incremental cost to FedEx of personal corporate aircraft
usage. Beginning in fiscal 2006 and through February 28, 2007, the policy allowed
personal use of FedEx corporate aircraft by the named executive officers and their family
members and guests without charge, subject to various annual caps.
• Mr. Smith is not required to pay FedEx for any travel on corporate aircraft by his
family members or guests when they are accompanying him and he is on business
travel. Mr. Smith is required to pay FedEx, however, for any personal travel by him
and any personal travel by his family members or guests when they are
accompanying him and he is on personal travel or when they are traveling without
him.
• Compensation is included in the table above for personal corporate aircraft travel
(which for this purpose includes travel to attend a board or stockholder meeting of
an outside company or entity for which the officer serves as a director or trustee) by
a named executive officer and his family members and guests to the extent, if any,
that the aggregate incremental cost to FedEx of all such travel exceeds the amount
the officer paid FedEx for such travel. The incremental cost to FedEx of personal
use of corporate aircraft is calculated based on the variable operating cost to FedEx,
which includes the cost of fuel, aircraft maintenance, crew travel, landing fees, ramp
fees and other smaller variable costs. Because FedEx corporate aircraft are used
primarily for business travel, fixed costs that do not change based on usage, such
as pilots’ salaries and purchase and lease costs, are excluded from this calculation.
• In addition, when the aircraft are already flying to a destination for business
purposes and the officers or their family members or guests ride along on the
aircraft for personal travel, there is no additional variable operating cost to FedEx
associated with the additional passengers, and thus no compensation is included in
the table above for such personal travel. With the exception of Mr. Smith, the officer
is still required to pay FedEx for such personal travel, however, if persons on
business travel occupy less than 50% of the total available seats on the aircraft. The
amount of such payment is a pro rata portion (based on the total number of
passengers) of the fuel cost for the flight, multiplied by two, plus applicable
passenger ticket taxes and fees.
• For tax purposes, income is imputed to each named executive officer for personal
travel and “business-related” travel (travel by the officer’s spouse or adult guest who
accompanies the officer on a business trip for the primary purpose of assisting the
officer with the business purpose of the trip) for the excess, if any, of the Standard
Industrial Fare Level (SIFL) value of all such flights during a calendar year over the
aggregate fuel payments made by the officer during that calendar year. Pursuant to
FedEx’s executive security procedures, Mr. Smith is required to use FedEx
corporate aircraft for all travel, including personal travel. Accordingly, FedEx
reimburses Mr. Smith for taxes relating to any imputed income for his personal travel
39
and the personal travel of his family members and guests when they are
accompanying him. FedEx reimburses the other named executive officers for taxes
relating to imputed income for business-related travel.
• Security services and equipment: Pursuant to FedEx’s executive security
procedures, the named executive officers are provided security services and equipment.
To the extent the services and equipment are provided by third parties (e.g., home
security system installation, maintenance and monitoring), we have included in the table
above the amounts paid by FedEx for such services and equipment. For Mr. Smith,
these amounts totaled $23,857. To the extent the security services are provided by
FedEx employees, we have included amounts representing: (a) the number of hours of
service provided to the officer by each such employee multiplied by (b) the total hourly
compensation cost of the employee (including, among other things, pension and other
benefit costs). For Mr. Smith, these amounts totaled $403,405.
• Tax return preparation services: FedEx requires officers to have their income tax
returns prepared by a qualified third party (other than our independent registered public
accounting firm) and pays all reasonable and customary costs for such services. FedEx
also makes tax reimbursement payments relating to the income imputed to the officers
for these services.
• Financial counseling services: FedEx reimburses officers for certain financial
counseling services, subject to various caps. FedEx also makes tax reimbursement
payments relating to the income imputed to the officers for these services.
• Personal use of company cars/car allowance: FedEx does not provide vehicles to
any of the named executive officers, except Mr. Smith. FedEx provides a midsize
sport-utility vehicle to Mr. Smith for personal use. The vehicle manufacturer provides the
vehicle to FedEx at no additional cost in consideration of the companies’ business
relationship. Prior to January 22, 2007, FedEx provided two other vehicles to Mr. Smith
for personal use. Those two vehicles were also provided to FedEx at no additional cost in
consideration of FedEx’s business relationship with another vehicle manufacturer. Even
though FedEx did not incur any actual monetary costs with respect to the vehicles,
compensation is included in the table above for Mr. Smith in an amount equal to the fair
market lease value of the vehicles (which is also the amount of income that was imputed
to Mr. Smith for tax purposes) for the portion of fiscal 2007 during which he had them. In
fiscal 2007, FedEx made tax reimbursement payments to Mr. Smith relating to the
income imputed to him for the vehicles in calendar 2006. Beginning with the 2007
calendar year, however, FedEx will no longer make such tax reimbursement payments.
While he was employed, Mr. Sullivan received a vehicle allowance.
• Physical examinations: FedEx pays for officers to have comprehensive annual
physical examinations.
• Nominal hospitality gifts at company-sponsored events: FedEx occasionally
provides officers with nominal hospitality gifts at FedEx-sponsored events.
40
The following table shows the amounts included in the table (the aggregate incremental
cost to FedEx) for each such item:
Personal Use
Personal Use Security Tax Return Financial of Company
of Corporate Services and Preparation Counseling Cars/Car
Aircraft Equipment Services Services Allowance Other Total
Name ($)(a) ($) ($) ($) ($) ($)(b) ($)
F.W. Smith . . . . . . . . . . . . 234,427 427,262 64,883 37,383 31,997 1,402 797,354
A.B. Graf, Jr. . . . . . . . . . . 184,374 10,181 5,197 2,138 – 3,570 205,460
D.J. Bronczek . . . . . . . . . . 92,684 6,201 4,950 7,500 – 1,830 113,165
T.M. Glenn . . . . . . . . . . . . 37,649 6,488 33,825 10,692 – 2,409 91,063
R.B. Carter . . . . . . . . . . . . 81,292 4,713 2,850 7,500 – 6,714 103,069
D.J. Sullivan . . . . . . . . . . . 68,127 570 – 27,960 4,057 3,138 103,852
(a) Includes the following amounts for use of corporate aircraft to attend board or stockholder
meetings of outside companies or organizations for which the officers serve as directors:
Mr. Graf ($96,963); Mr. Bronczek ($3,475); Mr. Glenn ($23,958); Mr. Carter ($25,967); and
Mr. Sullivan ($4,190).
(b) Includes physical examinations and nominal hospitality gifts at company-sponsored events.
(5) Mr. Sullivan retired on December 31, 2006. In connection with Mr. Sullivan’s retirement, he
entered into a consulting agreement, which is discussed under the caption “Consulting Agreement
and Non-Competition Agreement with Daniel J. Sullivan — Consulting Agreement” on page 56.
41
GRANTS OF PLAN-BASED AWARDS DURING FISCAL 2007
The following table sets forth information regarding grants of plan-based awards made to the
named executive officers during the fiscal year ended May 31, 2007:
All Other All Other
Stock Option Grant
Awards: Awards: Exercise Date Fair
Number Number of or Base Closing Value of
Estimated Future Payouts Under of Shares Securities Price of Price on Stock and
Non-Equity Incentive Plan Awards of Stock Underlying Option Grant Option
Type of Approval Threshold Target Maximum or Units Options Awards Date Awards
Name Plan/Award Grant Date Date ($) ($) ($) (#) (#) ($/Sh)(1) ($/Sh) ($)(2)
F.W. Smith . . . . . Stock Option(3) 06/01/2006 05/25/2006 – 200,000 110.06 111.35 6,399,280
FY07 AIC(4) 0 1,819,802 5,459,406
FY07-FY09 LTI(5) 875,000 3,500,000 5,250,000
A.B. Graf, Jr. . . . Restricted Stock(6) 06/01/2006 05/25/2006 6,145 676,319
Stock Option(3) 06/01/2006 05/25/2006 33,155 110.06 111.35 1,060,841
FY07 AIC(4) 0 785,030 1,884,072
FY07-FY09 LTI(5) 300,000 1,200,000 1,800,000
D.J. Bronczek . . . Restricted Stock(6) 06/01/2006 05/25/2006 7,901 869,584
Stock Option(3) 06/01/2006 05/25/2006 27,540 110.06 111.35 881,181
FY07 AIC(4) 0 910,872 2,186,093
(5)
FY07-FY09 LTI 375,000 1,500,000 2,250,000
T.M. Glenn . . . . . Restricted Stock(6) 06/01/2006 05/25/2006 6,145 676,319
Stock Option(3) 06/01/2006 05/25/2006 20,655 110.06 111.35 660,886
FY07 AIC(4) 0 697,550 1,674,120
FY07-FY09 LTI(5) 300,000 1,200,000 1,800,000
R.B. Carter . . . . . Restricted Stock(6) 06/01/2006 05/25/2006 6,145 676,319
Stock Option(3) 06/01/2006 05/25/2006 20,655 110.06 111.35 660,886
FY07 AIC(4) 0 640,516 1,537,238
(5)
FY07-FY09 LTI 300,000 1,200,000 1,800,000
D.J. Sullivan . . . . Restricted Stock(6) 06/01/2006 05/25/2006 5,267(7) 579,686
Stock Option(3) 06/01/2006 05/25/2006 13,770(8) 110.06 111.35 440,590
FY07 AIC(4) 0 421,047 1,010,513
FY07-FY09 LTI(5) 48,333 193,333 290,000
(1) The exercise price of the options granted to the individuals shown above was the fair market value
of FedEx’s common stock (the average of the high and low prices of the stock on the New York
Stock Exchange) on the date of grant.
(2) Represents the full grant date fair value of each equity-based award, computed in accordance with
FAS 123R.
(3) Stock options granted to the named executive officers vest ratably over four years beginning on
the first anniversary of the grant date. The options may not be transferred in any manner other
than by will or the laws of descent and distribution and may be exercised during the lifetime of the
optionee only by the optionee. See pages 33-34 for further discussion of stock option awards.
(4) In May 2006, the Compensation Committee established these annual performance cash
compensation plans, which provided a cash payment opportunity to the named executive officers
at the conclusion of fiscal 2007. Payment amounts were based upon the achievement of company
financial performance goals for fiscal 2007 and individual objectives established at the beginning
of fiscal 2007 for each officer other than Mr. Smith. Mr. Sullivan, who retired on December 31,
2006, received a prorated payout based on the proportion of the 2007 fiscal year during which he
was employed. See pages 27-30 for further discussion of these plans.
(5) The Board of Directors established this long-term performance cash compensation plan in May
2006. The plan provides a long-term cash payment opportunity to the named executive officers at
the conclusion of fiscal 2009 if FedEx achieves an aggregate earnings-per-share goal established
by the Board with respect to the three-fiscal-year period 2007 through 2009. No amounts can be
earned under the plan until 2009 because achievement of the earnings-per-share goal can only be
42
determined following the conclusion of the three-fiscal-year period. The estimated individual future
payouts under the plan are set dollar amounts ranging from threshold amounts, if the
earnings-per-share goal achieved is less than target, up to maximum amounts, if the plan goal is
substantially exceeded. There is no assurance that these estimated future payouts will be
achieved. Mr. Sullivan, who retired on December 31, 2006, is eligible for a payout under the
FY07-FY09 plan based on the proportion of the three-year-period during which he was employed.
See pages 31-32 for further discussion of this plan.
(6) Shares of restricted stock awarded to the named executive officers vest ratably over four years
beginning on the first anniversary of the grant date. Holders of restricted shares are entitled to
vote and receive any dividends paid on such shares. FedEx pays the taxes resulting from a
restricted stock award on behalf of the recipient (these tax reimbursement payments are not
included in the computation of the grant date fair value of the awards shown in the table above;
the payments are reflected in “All Other Compensation” in the Summary Compensation Table on
page 36). See pages 33-34 for further discussion of restricted stock awards.
(7) In connection with Mr. Sullivan’s retirement, the restrictions applicable to these shares lapsed on
June 1, 2007.
(8) These options were forfeited upon Mr. Sullivan’s retirement.
43
OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2007
The following table sets forth for each named executive officer certain information about
unexercised stock options and unvested shares of restricted stock held at the end of the fiscal year
ended May 31, 2007:
Option Awards Stock Awards
Number of Number of
Securities Securities Number of
Underlying Underlying Shares or Market Value of
Unexercised Unexercised Option Units of Stock Shares or Units of
Options Options Exercise Option That Have Stock That Have
(#) (#) Price Expiration Not Vested Not Vested
(a)
Name Exercisable Unexercisable ($) Date (#)(a) ($)(b)
F.W. Smith . . . . . . . . . . . . . . 400,000 – 32.1250 01/27/2008
300,000 – 31.9844 06/01/2008
300,000 – 55.9375 06/01/2009
300,000 – 36.0000 06/01/2010
437,500 – 40.4900 06/01/2011
375,000 – 53.7650 06/03/2012
187,500 62,500(1) 64.5300 06/02/2013
162,500 162,500(2) 72.8450 06/01/2014
62,500 187,500(3) 89.7000 06/01/2015
– 200,000(4) 110.0600 06/01/2016
A.B. Graf, Jr. . . . . . . . . . . . . 50,000 – 31.9844 06/01/2008
40,000 – 55.9375 06/01/2009
10,000 – 41.6563 01/21/2010
40,000 – 36.0000 06/01/2010
56,250 – 40.4900 06/01/2011
45,000 – 53.7650 06/03/2012
48,750 16,250(5) 64.5300 06/02/2013
19,125 19,125(6) 72.8450 06/01/2014
8,606 25,819(7) 89.7000 06/01/2015
– 33,155(8) 110.0600 06/01/2016
15,688(9) 1,751,095
D.J. Bronczek . . . . . . . . . . . . 50,000 31.9844 06/01/2008
40,000 – 55.9375 06/01/2009
20,000 – 40.4688 12/07/2009
12,600 – 41.6563 01/21/2010
60,000 – 36.0000 06/01/2010
72,531 – 40.4900 06/01/2011
60,000 – 53.7650 06/03/2012
63,750 21,250(10) 64.5300 06/02/2013
25,500 25,500(11) 72.8450 06/01/2014
11,475 34,425(12) 89.7000 06/01/2015
– 27,540(13) 110.0600 06/01/2016
20,259(14) 2,261,310
T.M. Glenn . . . . . . . . . . . . . . 40,000 – 55.9375 06/01/2009
10,000 – 41.6563 01/21/2010
40,000 – 36.0000 06/01/2010
56,250 – 40.4900 06/01/2011
45,000 – 53.7650 06/03/2012
48,750 16,250(15) 64.5300 06/02/2013
19,125 19,125(16) 72.8450 06/02/2014
8,606 25,819(17) 89.7000 06/01/2015
– 20,655(18) 110.0600 06/01/2016
15,688(19) 1,751,095
44
Option Awards Stock Awards
Number of Number of
Securities Securities Number of
Underlying Underlying Shares or Market Value of
Unexercised Unexercised Option Units of Stock Shares or Units of
Options Options Exercise Option That Have Stock That Have
(#) (#) Price Expiration Not Vested Not Vested
(a)
Name Exercisable Unexercisable ($) Date (#)(a) ($)(b)
R.B. Carter. . . . . . . . . . . . . . 6,235 – 55.9375 06/01/2009
14,211 – 36.0000 06/01/2010
27,945 – 40.4900 06/01/2011
22,233 – 53.7650 06/03/2012
25,012 16,250(20) 64.5300 06/02/2013
9,749 19,125(21) 72.8450 06/01/2014
4,303 25,819(22) 89.7000 06/01/2015
– 20,655(23) 110.0600 06/01/2016
15,688(24) 1,751,095
D.J. Sullivan . . . . . . . . . . . . . 23,141 – 53.7650 06/03/2012
28,125 9,375(25) 64.5300 06/02/2013
12,750 12,750(26) 72.8450 06/01/2014
5,737 17,213(27) 89.7000 06/01/2015
5,267(28) 587,903
(a) The following table sets forth the vesting dates of the options and restricted stock included in
these columns:
Date Number Date Number
(1) (5)
F. W. Smith . . . . . . . . . . . 06/02/2007 62,500 A. B. Graf, Jr. . . . . . . . . . 06/02/2007 16,250
(2) (6)
06/01/2007 81,250 06/01/2007 9,562
06/01/2008 81,250 06/01/2008 9,563
(3) (7)
06/01/2007 62,500 06/01/2007 8,606
06/01/2008 62,500 06/01/2008 8,606
06/01/2009 62,500 06/01/2009 8,607
(4) (8)
06/01/2007 50,000 06/01/2007 8,288
06/01/2008 50,000 06/01/2008 8,289
06/01/2009 50,000 06/01/2009 8,289
06/01/2010 50,000 06/01/2010 8,289
(9)
06/01/2007 3,072
07/12/2007 1,536
08/14/2007 1,861
06/01/2008 3,072
07/12/2008 1,537
06/01/2009 3,073
06/01/2010 1,537
45
Date Number Date Number
(10) (20)
D. J. Bronczek . . . . . . . . . 06/02/2007 21,250 R. B. Carter . . . . . . . . . . . 06/02/2007 16,250
(11) (21)
06/01/2007 12,750 06/01/2007 9,562
06/01/2008 12,750 06/01/2008 9,563
(12) (22)
06/01/2007 11,475 06/01/2007 8,606
06/01/2008 11,475 06/01/2008 8,606
06/01/2009 11,475 06/01/2009 8,607
(13) (23)
06/01/2007 6,885 06/01/2007 5,163
06/01/2008 6,885 06/01/2008 5,164
06/01/2009 6,885 06/01/2009 5,164
06/01/2010 6,885 06/01/2010 5,164
(14) (24)
06/01/2007 3,950 06/01/2007 3,072
07/12/2007 1,975 07/12/2007 1,536
08/14/2007 2,481 08/14/2007 1,861
06/01/2008 3,950 06/01/2008 3,072
07/12/2008 1,976 07/12/2008 1,537
06/01/2009 3,951 06/01/2009 3,073
06/01/2010 1,976 06/01/2010 1,537
(15)
T. M. Glenn . . . . . . . . . . . 06/02/2007 16,250 (25)
D. J. Sullivan . . . . . . . . . . 06/02/2007 9,375
(16)
06/01/2007 9,562 (26)
06/01/2007 6,375
06/01/2008 9,563
(17)
06/01/2008 6,375
06/01/2007 8,606 (27)
06/01/2008 8,606 06/01/2007 5,738
06/01/2008 5,737
06/01/2009 8,607
(18)
06/01/2009 5,738
06/01/2007 5,163 (28)
06/01/2008 5,164 06/01/2007 5,267
06/01/2009 5,164
06/01/2010 5,164
(19)
06/01/2007 3,072
07/12/2007 1,536
08/14/2007 1,861
06/01/2008 3,072
07/12/2008 1,537
06/01/2009 3,073
06/01/2010 1,537
(b) Computed by multiplying the closing market price of FedEx’s common stock on May 31, 2007
(which was $111.62) by the number of shares.
46
OPTION EXERCISES AND STOCK VESTED DURING FISCAL 2007
The following table sets forth for each named executive officer certain information about stock
options that were exercised and restricted stock that vested during the fiscal year ended May 31, 2007:
Option Awards Stock Awards
Number of Number of
Shares Value Shares Value
Acquired Realized Acquired Realized
on Exercise on Exercise on Vesting on Vesting
Name (#) ($)(1) (#) ($)(2)
F.W. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 25,072,384 – –
A.B. Graf, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 7,183 752,184
D.J. Bronczek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 9,431 986,539
T.M. Glenn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 7,183 752,184
R.B. Carter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,286(3) 2,010,786(3) 7,183 752,184
D.J. Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,859 102,561 14,526 1,562,794
(1) If the shares were sold immediately upon exercise, the value realized on exercise of an option is the
difference between the actual sales price and the exercise price of the option. Otherwise, the value
realized is the difference between the fair market value of FedEx’s common stock (the average of the
high and low prices of the stock on the New York Stock Exchange) on the date of exercise and the
exercise price of the option.
(2) Represents the fair market value of the shares on the vesting date.
(3) Of this total amount, 22,835 shares and realized value in the amount of $1,053,355 represent the
exercise of options for which the economic benefit had been transferred to Mr. Carter’s former spouse
pursuant to a domestic relations order.
47
FISCAL 2007 PENSION BENEFITS
The following table sets forth for each named executive officer certain information with respect to
each plan that provides for payments or other benefits at, following or in connection with retirement,
other than our stock option and restricted stock plans. For information regarding benefits triggered by
retirement under our stock option and restricted stock plans, see pages 52-53.
Number Present
of Years Value of Payments
Credited Accumulated During
Service Benefit Fiscal 2007
Name Plan Name (#) ($)(1) ($)
F.W. Smith . . . . . . FedEx Corporation Employees’ Pension Plan 35 1,218,808 –
FedEx Corporation Retirement Parity Pension Plan 35 27,100,770 –
A.B. Graf, Jr. . . . . FedEx Corporation Employees’ Pension Plan 27 806,526 –
FedEx Corporation Retirement Parity Pension Plan 27 7,911,321 –
D.J. Bronczek . . . . FedEx Corporation Employees’ Pension Plan 31 840,372 –
FedEx Corporation Retirement Parity Pension Plan 31 9,756,338 –
T.M. Glenn . . . . . . FedEx Corporation Employees’ Pension Plan 26 719,633 –
FedEx Corporation Retirement Parity Pension Plan 26 6,500,616 –
R.B. Carter . . . . . FedEx Corporation Employees’ Pension Plan 14 323,756 –
FedEx Corporation Retirement Parity Pension Plan 14 2,645,107 –
D.J. Sullivan(2) . . . FedEx Corporation Employees’ Pension Plan 34 1,170,207 43,125
FedEx Corporation Retirement Parity Pension Plan 34 1,683,936(3) 11,465,117
(1) Except with respect to Mr. Sullivan’s Parity Plan (as defined below) benefit, these amounts were
determined using assumptions (e.g., for interest rates and mortality rates) consistent with those used in
the audited consolidated financial statements included in our annual report on Form 10-K for the fiscal
year ended May 31, 2007. The benefits are expressed as lump sum amounts, even though the benefits
using the traditional pension benefit formula under the Pension Plan (as defined below) are not payable
as a lump sum distribution. The present value of the accumulated benefit under the Parity Plan includes
an amount to reflect FedEx’s practice of paying employment taxes on behalf of Parity Plan participants.
This estimated employment tax amount, including the tax gross-up, equals 3.75% of the present value
of the Parity Plan benefit excluding the Portable Pension Account (as defined below) benefit, for which
employment taxes have already been paid.
(2) Mr. Sullivan retired on December 31, 2006, and began receiving payments under the Pension Plan and
Parity Plan during fiscal 2007.
(3) This amount represents the remaining balance of Mr. Sullivan’s Parity Plan benefit, which will be paid in
the first quarter of fiscal 2008.
Overview of Pension Plans
FedEx maintains a tax-qualified, defined benefit pension plan called the FedEx Corporation
Employees’ Pension Plan (the “Pension Plan”). For 2007, the maximum compensation limit under a
tax-qualified pension plan is $225,000. The Internal Revenue Code also limits the maximum annual
benefits that may be accrued under a tax-qualified, defined benefit pension plan. In order to provide
100% of the benefits that would otherwise be denied certain management-level participants in the
Pension Plan due to these limitations, FedEx also maintains a supplemental non-tax-qualified plan
called the FedEx Corporation Retirement Parity Pension Plan (the “Parity Plan”). Benefits under the
Parity Plan are general, unsecured obligations of FedEx.
Effective May 31, 2003, FedEx amended the Pension Plan and the Parity Plan to add a cash
balance feature, which is called the Portable Pension Account. Eligible employees as of May 31, 2003
48
had the option to make a one-time election to accrue future pension benefits under either the cash
balance formula or the traditional pension benefit formula. In either case, employees retained all
benefits previously accrued under the traditional pension benefit formula and continued to receive the
benefit of future compensation increases on benefits accrued as of May 31, 2003. All eligible
employees hired after May 31, 2003 are only eligible to participate in the Portable Pension Account
feature.
In February 2007, the Board of Directors approved changes to the Pension Plan and Parity Plan
such that:
• Effective June 1, 2008, eligible employees who participate in the Pension Plan and the Parity
Plan, including all of the named executive officers (other than Mr. Sullivan), will accrue all
future pension benefits under the Portable Pension Account, and those benefits will be
payable after the employee retires or terminates employment from FedEx.
• Benefits previously accrued under the Pension Plan and Parity Plan using the traditional
pension benefit formula will be capped as of May 31, 2008, and those benefits will be
payable beginning at retirement.
The Board also approved changes to FedEx’s tax-qualified, defined contribution 401(k) retirement
savings plans, in which the named executive officers participate. The 401(k) plan changes include
increasing the annual matching company contribution from $500 to 3.5% of eligible earnings
beginning January 1, 2008. In order to provide 100% of the benefits that would otherwise be denied
participants in the tax-qualified 401(k) plans due to certain limitations imposed by the federal tax laws,
Parity Plan participants, including the named executive officers (other than Mr. Sullivan), will receive
additional Portable Pension Account compensation credits equal to 3.5% of any eligible earnings
above the maximum compensation limit for tax-qualified plans ($225,000 for 2007).
Traditional Pension Benefit
Under the traditional pension benefit formula, the Pension Plan and the Parity Plan provide 2% of
the average of the five calendar years (three calendar years for the Parity Plan) of highest earnings
during employment multiplied by years of credited service for benefit accrual up to 25 years. Covered
compensation for the traditional pension benefit under the Pension Plan and the Parity Plan for the
named executive officers includes salary and annual incentive compensation.
Portable Pension Account
For employees accruing benefits under the Portable Pension Account, the pension benefit
accrued after May 31, 2003 is expressed as a notional cash balance account. For each plan year in
which a participant is credited with a year of service, compensation credits are added based on the
participant’s age and years of service as of the end of the prior plan year and the participant’s eligible
compensation for the prior calendar year based on the following table:
Age + Service on May 31 Compensation Credit
Less than 55 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
55-64. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
65-74. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7%
75 or over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8%
On May 31, 2006, the sum of age plus years of service for the three named executive officers
who elected the Portable Pension Account feature was as follows: Mr. Smith — 95; Mr. Graf — 78;
and Mr. Bronczek — 81. Eligible compensation under the Portable Pension Account feature includes
salary and annual incentive compensation.
49
Interest credits are added to a participant’s Portable Pension Account benefit at the end of each
fiscal quarter (August 31, November 30, February 28 and May 31). The May 31 interest credit is
added prior to the May 31 compensation credit. Interest credits are based on the Portable Pension
Account notional balance and an annual interest credit rate, which is equal to the greater of (a) the
one-year Treasury constant maturities rate for April of the preceding plan year plus 1% and (b) 4%.
The annual interest credit rate for each plan year, however, cannot be more than the average 30-year
Treasury rate for April of the preceding plan year. Interest credits will continue to be added until the
last day of the month before plan benefits are distributed. The interest-crediting rate for the plan year
ended May 31, 2006 was 4.40%. The interest-crediting rate for the plan year ended May 31, 2007
was 5.06%.
Upon a participant’s retirement or other termination of employment, an amount equal to the
vested Portable Pension Account notional balance is payable to the participant in the form of a lump
sum payment or an annuity.
Lump Sum Distribution
Participants may elect to receive benefits accrued through December 31, 2004 under the Parity
Plan as a single lump sum distribution. If a participant does not elect to receive a lump sum
distribution, benefits accrued under the Parity Plan through December 31, 2004 will be paid as an
annuity. As a result of changes in U.S. tax law, the Parity Plan was amended to require benefits
accrued after December 31, 2004 to be paid to participants as a lump sum distribution.
Taxes
FedEx pays the employment taxes attributable to the Parity Plan benefit on behalf of the
participant, and reimburses the participant for any taxes resulting from such payment of employment
taxes. To the extent the taxes relate to the Portable Pension Account, they are due and the tax
reimbursement payments are made as the benefits are accrued, and such payments are included in
the “All Other Compensation” column of the Summary Compensation Table on page 36. Otherwise,
an estimate of such payments is reflected in the “Present Value of Accumulated Benefit” column of
the Pension Benefits table above.
50
FISCAL 2007 NONQUALIFIED DEFERRED COMPENSATION
The following table sets forth for each named executive officer certain information with respect to
plans that provide for the deferral of compensation on a basis that is not tax-qualified:
Aggregate
Aggregate Aggregate Balance at
Earnings in Withdrawals/ End of
Fiscal 2007 Distributions Fiscal 2007
Name ($) ($) ($)
F.W. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – –
A.B. Graf, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – –
D.J. Bronczek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – –
T.M. Glenn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – –
R.B. Carter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – –
D.J. Sullivan(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549,650 392,456 6,501,492
(1) Mr. Sullivan has accounts in the following two FedEx Ground deferred compensation plans, which
FedEx assumed in connection with its acquisition of Caliber System, Inc. in January 1998: the
FedEx Ground Officers’ Deferred Compensation Plan and the FedEx Ground Stock Credit Plan.
• FedEx Ground Officers’ Deferred Compensation Plan: This plan is similar to a 401(k)
plan, but is not tax-qualified. Until December 31, 2002, participants could elect to defer a
portion of their compensation until retirement, and the company made matching contributions
to the participants’ accounts. The company matching contribution was made in FedEx
common stock equivalent units. Effective January 1, 2003, no further deferrals or company
matching contributions are made under the plan, although participants may continue to
acquire FedEx common stock equivalent units under the plan pursuant to dividend equivalent
rights. Participants select funds in which to invest their account balances, and the account
balances change to reflect gains or losses in the investments they have selected. Mr. Sullivan
retired on December 31, 2006, and received his first distribution under the plan during fiscal
2007. Distributions to Mr. Sullivan are payable in cash.
• FedEx Ground Stock Credit Plan: Prior to 1991, phantom shares of Caliber stock were
awarded to participants in this plan and credited to an account recorded for each participant,
and distributed to participants following retirement. Following FedEx’s acquisition of Caliber,
these Caliber stock credits were converted to FedEx common stock credits. The participants’
accounts are credited with dividends paid on FedEx stock. Cash dividends are converted to
stock credits based upon the closing price of FedEx stock on the dividend payment dates.
Distributions to participants are payable in FedEx stock. Mr. Sullivan is scheduled to receive
his first distribution under the plan in February 2008.
51
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
This section provides information regarding payments and benefits to the named executive
officers (other than Mr. Sullivan) that would be triggered by termination of the officer’s employment
(including resignation, or voluntary termination; severance, or involuntary termination; and retirement)
or a change of control of FedEx.
Each of the named executive officers (other than Mr. Sullivan) is an at-will employee and, as
such, does not have an employment contract. In addition, if the officer’s employment terminates for
any reason other than retirement, death or permanent disability, any unvested stock options are
automatically terminated and any unvested shares of restricted stock are automatically forfeited.
Accordingly, there are no payments or benefits that are triggered by any termination event (including
resignation and severance), other than retirement, death or permanent disability or termination after a
change of control of FedEx.
Benefits Triggered by Retirement, Death or Permanent Disability — Stock Option and
Restricted Stock Plans
Retirement. When an employee retires:
• all restrictions applicable to the restricted shares held by the employee lapse (if retirement
occurs at or after age 60), provided that the restrictions shall not lapse prior to the first
anniversary of the date of award of the restricted shares;
• all of the employee’s unvested stock options granted prior to June 1, 2006 continue to vest
according to their terms after retirement; and
• all of the employee’s unvested stock options granted on or after June 1, 2006 terminate.
The following table quantifies for each named executive officer the value of his unvested
restricted shares, the vesting of which would be (or in the case of Mr. Sullivan, were) accelerated
upon retirement:
Benefits Triggered By Retirement
Value of Unvested
Restricted Shares
Name ($)
F.W. Smith –
A.B. Graf, Jr.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,095
D.J. Bronczek(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,261,310
T.M. Glenn(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,095
R.B. Carter(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,095
D.J. Sullivan(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,334,627
(1) Computed by multiplying the price per share of FedEx’s common stock by the number of unvested
shares of restricted stock held by the officer (including 6,145 shares for each of Messrs. Graf,
Glenn and Carter and 7,901 shares for Mr. Bronczek, which shares were granted on June 1, 2006
and could not otherwise vest in connection with the officer’s retirement prior to June 1, 2007). The
table assumes that the officer retired on May 31, 2007 (and that the officer was age 60 or above
on such date) and that the price per share of FedEx’s common stock was the closing market price
on May 31, 2007 (which was $111.62).
(2) In connection with Mr. Sullivan’s retirement on December 31, 2006, the restrictions on
8,239 shares lapsed on December 31, 2006. The value of these shares, computed by multiplying
the closing market price per share of FedEx’s common stock on December 29, 2006 (which was
$108.62) by the number of shares, was $894,920. In addition, the restrictions applicable to
Mr. Sullivan’s June 1, 2006 stock award (5,267 shares) lapsed on June 1, 2007. The vesting of
3,951 shares of this award was accelerated as a result of Mr. Sullivan’s retirement and the value
52
of these shares, computed by multiplying the closing market price per share of FedEx’s common
stock on June 1, 2007 (which was $111.29) by the number of shares, was $439,707.
For information regarding retirement benefits under our pension plans, see “Fiscal 2007 Pension
Benefits” on page 48. For information regarding distributions to Mr. Sullivan under FedEx Ground’s
deferred compensation plans, see “Fiscal 2007 Nonqualified Deferred Compensation” on page 51.
Death or Permanent Disability. When an employee dies or becomes permanently disabled:
• all restrictions applicable to the restricted shares held by the employee lapse, provided that
the restrictions shall not lapse prior to the first anniversary of the date of award of the
restricted shares; and
• all of the employee’s unvested stock options immediately vest.
The following table quantifies for each named executive officer (other than Mr. Sullivan) the value
of his unvested restricted shares and stock options, the vesting of which would be accelerated upon
death or permanent disability (assuming the officer died or became permanently disabled on May 31,
2007):
Benefits Triggered By Death or Permanent Disability
Value of Unvested Value of Unvested
Restricted Shares Stock Options Total
Name ($)(1) ($)(2) ($)
F.W. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 13,666,063 13,666,063
A.B. Graf, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,095 2,124,459 3,875,554
D.J. Bronczek . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,261,310 2,786,983 5,048,293
T.M. Glenn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,095 2,104,959 3,856,054
R.B. Carter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,095 2,104,959 3,856,054
(1) Computed by multiplying the closing market price per share of FedEx’s common stock on May 31,
2007 (which was $111.62) by the number of unvested shares of restricted stock held by the officer
as of May 31, 2007 (including 6,145 shares for each of Messrs. Graf, Glenn and Carter and
7,901 shares for Mr. Bronczek, which shares were granted on June 1, 2006 and could not
otherwise vest in connection with the officer’s death or permanent disability prior to June 1, 2007).
(2) Represents the difference between the closing market price per share of FedEx’s common stock
on May 31, 2007 (which was $111.62) and the exercise price of each unvested option held by the
officer as of May 31, 2007.
In addition, FedEx provides each named executive officer (other than Mr. Sullivan) with:
• $1,500,000 of group term life insurance coverage; and
• A supplemental long-term disability program, with a monthly benefit equal to the difference
between 60% of the officer’s basic monthly earnings and $10,000 (provided the officer
continues to meet the definition of disability, these benefits generally continue until age 65).
Benefits Triggered by Change of Control or Termination After Change of Control — Stock
Option and Restricted Stock Plans and Management Retention Agreements
Stock Options and Restricted Stock. Our stock option plans provide that, in the event of a
change of control (as defined in the plans), each holder of an unexpired option under any of the plans
has the right to exercise such option without regard to the date such option would first be exercisable.
This right continues, with respect to holders whose employment with FedEx terminates following a
change of control, for a period of twelve months after such termination or until the option’s expiration
date, whichever is sooner.
Our restricted stock plans provide that, in the event of a change of control (as defined in the
plans), depending on the change of control event, either (i) the restricted shares will be canceled and
53
FedEx shall make a cash payment to each holder in an amount equal to the product of the highest
price per share received by the holders of FedEx’s common stock in connection with the change of
control multiplied by the number of restricted shares held or (ii) the restrictions applicable to any such
shares will immediately lapse.
The following table quantifies for each named executive officer (other than Mr. Sullivan) the value
of his unvested restricted shares and stock options, the vesting of which would be accelerated upon a
change of control (assuming that the change of control occurred on May 31, 2007 and that the
highest price per share received by FedEx’s stockholders in connection with the change of control was
the closing market price on May 31, 2007, which was $111.62):
Benefits Triggered By Change of Control(1)
Value of Unvested Value of Unvested
Restricted Shares Stock Options Total
Name ($)(2) ($)(3) ($)
F.W. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 13,666,063 13,666,063
A.B. Graf, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,095 2,124,459 3,875,554
D.J. Bronczek . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,261,310 2,786,983 5,048,293
T.M. Glenn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,095 2,104,959 3,856,054
R.B. Carter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,751,095 2,104,959 3,856,054
(1) As discussed below, the officer is also entitled under his MRA (as defined below) to a three-year
employment agreement upon a change of control and certain guaranteed compensation and
benefits during the term of the three-year employment period.
(2) Computed by multiplying the closing market price per share of FedEx’s common stock on May 31,
2007 (which was $111.62) by the number of unvested shares of restricted stock held by the officer
as of May 31, 2007.
(3) Represents the difference between the closing market price per share of FedEx’s common stock
on May 31, 2007 (which was $111.62) and the exercise price of each unvested option held by the
officer as of May 31, 2007.
Management Retention Agreements. FedEx has entered into Management Retention
Agreements (“MRAs”) with each of its executive officers, including the named executive officers. The
purpose of the MRAs is to secure the executives’ continued services in the event of any threat or
occurrence of a change of control (as defined in the MRAs). The terms and conditions of the MRAs
with the named executive officers (other than Mr. Sullivan) are summarized below. Mr. Sullivan’s MRA
was terminated effective December 31, 2006, the date of his retirement, in accordance with the terms
of the agreement.
Term. Each MRA renews annually for consecutive two-year terms, unless FedEx gives six
months’ prior notice that the agreement will not be extended. The non-extension notice may not be
given at any time when the Board of Directors has knowledge that any person has taken steps
reasonably calculated to effect a change of control of FedEx.
Employment Period. Upon a change of control, the MRA immediately establishes a three-year
employment agreement with the executive officer. During the employment period, the officer’s position
(including status, offices, titles and reporting relationships), authority, duties and responsibilities may
not be materially diminished.
Compensation. During the three-year employment period, the executive officer receives base
salary (no less than his highest base salary over the twelve-month period prior to the change of
control) and annual incentive compensation (no less than his average annual incentive compensation
over the three-year period prior to the change of control). The executive officer also receives incentive
(including long-term performance bonus), savings and retirement plan benefits, expense
reimbursement, fringe benefits, office and staff support, welfare plan benefits and vacation benefits.
54
These benefits must be no less than the benefits the officer had during the 90-day period immediately
prior to the change of control.
Termination. The MRA terminates immediately upon the executive officer’s death, voluntary
termination or retirement. FedEx may terminate the MRA for disability, as determined in accordance
with the procedures under FedEx’s long-term disability benefits plan. Once disability is established,
the officer receives 180 days’ prior notice of termination. FedEx also may terminate the officer’s MRA
for “cause.”
Benefits for Qualifying Termination. A “qualifying termination” is a termination by FedEx other
than for cause, disability or death or by the officer “for good reason” (principally relating to assignment
of duties inconsistent with the officer’s position or reductions in compensation).
In the event of a qualifying termination, the executive officer will receive: (i) a lump sum cash
payment equal to three times his annual compensation, which includes his base salary, target annual
incentive compensation and target long-term incentive compensation; (ii) a lump sum cash payment
equal to a pro rata portion of his target payments under the annual and long-term incentive
compensation plans then in effect based on the proportion of the applicable one- or three-fiscal-year
plan period during which he was employed; and (iii) a lump sum cash payment equal to the excess of
the benefit that would be accrued under FedEx’s pension and parity plans based on an additional
36 months of age and service over what was actually earned as of the date of termination.
For a period ending on the earliest of (i) 36 months following the termination date, (ii) the
commencement of equivalent benefits from a new employer, or (iii) the date on which the executive
officer reaches age 60, FedEx agrees to keep in force each plan and policy providing medical,
accidental death, disability and life coverage to the officer and his dependents with the same level of
coverage and the same terms as each policy and plan in effect immediately prior to the termination
date. For a period of 12 months following the termination date, FedEx agrees to provide, at its
expense, executive level outplacement assistance to the officer by a nationally recognized
outplacement firm acceptable to the officer.
FedEx agrees to pay any taxes incurred by the officer for any payment, distribution or other
benefit (including any acceleration of vesting of any benefit) received or deemed received by the
officer from FedEx that triggers certain excise taxes.
In exchange for these benefits, the executive officer has agreed that, for the one-year period
following his termination, he will not own, manage, operate, control or be employed by any enterprise
that competes with FedEx or any of its affiliates.
55
The following table quantifies for each named executive officer (other than Mr. Sullivan) the
payments and benefits triggered by a qualifying termination (as defined in the MRAs) of the officer
immediately following a change of control (assuming that the change of control and qualifying
termination occurred on May 31, 2007 and that the highest price per share received by FedEx’s
stockholders in connection with the change of control was the closing market price on May 31, 2007,
which was $111.62):
Payments and Benefits Triggered By Termination After Change of Control
Lump Sum Cash Lump Sum Cash
Payment – Payment – Lump Sum Cash
3x Base Salary and Prorated Target Payment – Health
Target Compensation Compensation Additional 36 and Tax
Under Non-Equity Under Non-Equity Months Under Welfare Outplacement Reimbursement
Incentive Plans Incentive Plans Pension Plans Benefits Assistance Payments Total
Name ($) ($) ($) ($) ($)(1) ($) ($)
F.W. Smith . . . . . . . . . . 16,408,950 6,903,136 719,916 – 258,972 – 24,290,974
A.B. Graf, Jr. . . . . . . . . 7,221,858 2,435,030 344,949 57,357 161,367 – 10,220,561
D.J. Bronczek . . . . . . . . 8,465,232 3,077,539 384,419 200,015 168,511 – 12,295,716
T.M. Glenn . . . . . . . . . . 6,667,818 2,347,550 200,417 60,989 143,385 – 9,420,159
R.B. Carter . . . . . . . . . 6,306,600 2,290,516 552,391 35,386 131,662 – 9,316,555
(1) The assumed value of outplacement assistance is 18.5% of the officer’s base salary.
Consulting Agreement and Non-Competition Agreement with Daniel J. Sullivan
Consulting Agreement. Daniel J. Sullivan retired as President and Chief Executive Officer of
FedEx Ground on December 31, 2006. In connection with Mr. Sullivan’s retirement, he and FedEx
Ground entered into a consulting agreement, the terms and conditions of which are summarized
below. The purpose of the consulting agreement is to help ensure a smooth transition of FedEx
Ground leadership and to secure Mr. Sullivan’s assistance with respect to the numerous class-action
lawsuits and other proceedings that claim that FedEx Ground’s owner-operators should be treated as
employees rather than independent contractors.
Term. The term of the agreement began on January 1, 2007 and ends on December 31, 2008.
The agreement may be terminated earlier by either party upon 30 days’ prior written notice.
Services Provided. Mr. Sullivan will provide consulting services with respect to the class-action
lawsuits and other proceedings that claim that the company’s owner-operators should be treated as
employees rather than independent contractors, including providing deposition and trial testimony as
necessary. Mr. Sullivan will also provide advice on such other matters as are identified by FedEx’s
Chairman, President and Chief Executive Officer or Executive Vice President, General Counsel and
Secretary. Mr. Sullivan’s services will be limited to no more than 40 hours a month.
Payment for Services. Mr. Sullivan will receive annual cash consideration equal to one-half of
his fiscal 2006 annual base salary ($435,864), payable as follows: (i) $254,254 on July 2, 2007, and
(ii) $36,322 on the first day of each succeeding month during the term of the agreement.
During the term of the agreement, FedEx will also make available to Mr. Sullivan:
• Reasonable administrative assistance in connection with his performance of consulting
services;
• Office space and equipment in connection with his performance of consulting services; and
• Corporate aircraft in connection with his performance of consulting services on terms
consistent with use by FedEx executive management.
In addition, Mr. Sullivan will be reimbursed for reasonable and necessary out-of-pocket expenses
incurred in the performance of his consulting services.
56
Indemnification. FedEx will indemnify Mr. Sullivan, in a manner consistent with FedEx’s
indemnification practices for executive management, from any liabilities, losses or suits related to his
performance of services.
Non-Competition Agreement. In connection with the acquisition of Caliber System, Inc.,
FedEx entered into a Confidentiality, Non-Solicitation and Non-Competition Agreement with
Mr. Sullivan dated as of January 27, 1998. Pursuant to this agreement, as it was amended in April
2000, Mr. Sullivan has agreed (i) during the term of his employment and for a period of 60 months
thereafter, not to compete with FedEx in the express and non-express document and package
delivery businesses (not including, however, the truckload and less-than-truckload freight businesses),
(ii) during the term of his employment and for a period of 36 months thereafter, not to solicit any
customer or otherwise materially interfere with the business or accounts of FedEx or solicit the
employment or services of, or hire, any person who is, or was within the prior one year period,
engaged as an employee or consultant of FedEx and (iii) not to disclose any confidential information
of FedEx. As consideration for the covenants set forth above, FedEx paid Mr. Sullivan a lump sum
payment of $4,894,376 in 2000.
57
DIRECTORS’ COMPENSATION
Outside Directors’ Compensation
Beginning in July 2007, non-employee (outside) directors will be paid:
• a quarterly retainer of $19,375;
• $2,000 for each in-person Board meeting attended; and
• $2,000 for each in-person committee meeting attended.
Directors who attend a Board or committee meeting telephonically will be paid 75% of the
applicable in-person meeting fee.
Committee chairpersons of the Compensation, Nominating & Governance and Information
Technology Oversight Committees will be paid an additional annual fee of $12,500. The Audit
Committee chairperson will be paid an additional annual fee of $20,000. Each outside director who is
elected at the annual meeting also will receive a stock option for 4,400 shares of common stock on
the date of the 2007 annual meeting. Any outside director appointed to the Board after the 2007
annual meeting will receive a stock option for 4,400 shares of common stock upon his or her
appointment.
Frederick W. Smith, the only director who is also a FedEx employee, receives no additional
compensation for serving as a director.
The Compensation Committee annually reviews director compensation, including, among other
things, comparing FedEx’s director compensation practices with those of other public companies of
comparable size. Before making a recommendation regarding director compensation to the Board, the
Compensation Committee considers that the directors’ independence may be compromised if
compensation exceeds appropriate levels or if FedEx enters into other arrangements beneficial to the
directors.
Retirement Plan for Outside Directors
In July 1997, the Board of Directors of FedEx Express (FedEx’s predecessor) voted to freeze the
Retirement Plan for Outside Directors (that is, no further benefits would be earned under this plan).
This plan is unfunded and any benefits under the plan are general, unsecured obligations of FedEx.
Concurrent with the freeze, the Board amended the plan to accelerate the vesting of the benefits
for each outside director who was not yet vested under the plan. In general, each outside director is
entitled to a retirement benefit beginning as of the first day of the fiscal quarter of FedEx next
following the date of termination of his or her directorship or the date such director attains age 60,
whichever is later. The benefit is an annual amount, payable as a lump-sum distribution or in quarterly
installments for no less than ten years and no more than fifteen years depending on years of service,
equal to 10% for each year of service up to 100% of the annual retainer fee being paid to the outside
director at the time the plan was frozen. Each outside director then serving on the Board who was not
yet vested (two directors) will now receive a benefit equal to 10% for each year of service up to the
date the plan was frozen. The remaining outside directors will receive their benefits based on their
years of service and annual retainer at the time the plan was frozen. Once all benefits are paid from
the plan, it will be terminated. Judith L. Estrin, Philip Greer, J.R. Hyde, III, Paul S. Walsh and Peter S.
Willmott are the only current directors entitled to any future benefits under this plan.
Charles T. Manatt was elected to the Board of Directors at the 2004 annual meeting of
stockholders. Mr. Manatt previously served as a director of FedEx (and its predecessor, FedEx
Express) from 1989 until his resignation in December 1999 to become the United States Ambassador
to the Dominican Republic. In accordance with the terms of the plan, Mr. Manatt is paid a retirement
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benefit of $36,000 per year, payable in quarterly installments. The payments to Mr. Manatt under this
plan will end in December 2009 unless Mr. Manatt elects, in accordance with the terms of the plan, to
be paid a lump sum amount for the remaining installments.
Fiscal 2007 Director Compensation
The following table sets forth information regarding the compensation of FedEx’s non-employee
(outside) directors for the fiscal year ended May 31, 2007:
Fees Earned
or Paid in Option All Other
Cash Awards Compensation Total
Name ($) ($)(1)(2)(3) ($) ($)
J.L. Barksdale . . . . . . . . . . . . . . . . . . . . . . . . 102,063 128,625 – 230,688
A.A. Busch IV . . . . . . . . . . . . . . . . . . . . . . . . . 95,688 128,625 – 224,313
J.A. Edwardson . . . . . . . . . . . . . . . . . . . . . . . 118,000 128,625 – 246,625
J.L. Estrin . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,250 128,625 – 235,875
J.K. Glass . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,000 128,625 – 232,625
P. Greer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,125 128,625 – 236,750
J.R. Hyde, III . . . . . . . . . . . . . . . . . . . . . . . . . 93,938 128,625 – 222,563
S.A. Jackson . . . . . . . . . . . . . . . . . . . . . . . . . 103,875 128,625 – 232,500
S.R. Loranger . . . . . . . . . . . . . . . . . . . . . . . . . 74,250 86,500 – 160,750
C.T. Manatt . . . . . . . . . . . . . . . . . . . . . . . . . . 96,125 128,625 36,000(4) 260,750
J.I. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 128,625 – 228,625
P.S. Walsh . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,375 128,625 – 222,000
P.S. Willmott . . . . . . . . . . . . . . . . . . . . . . . . . . 121,125 128,625 – 249,750
(1) The amounts included in this column reflect the value of option awards that were recognized as an
expense for financial statement reporting purposes in fiscal 2007, calculated pursuant to FAS
123R, excluding any estimate of forfeitures. Accordingly, the column includes amounts relating to
awards granted during and prior to fiscal 2007 (except with respect to Mr. Loranger). The following
table sets forth each option award represented in the column (except with respect to Mr. Loranger)
and the amount included for each such award. The amount shown for Mr. Loranger represents the
value of awards granted to him in fiscal 2007 only, as he was not a director in the prior year.
Assumptions used in the calculation of these amounts are included in note 9 to the audited
consolidated financial statements included in our annual report on Form 10-K for the fiscal year
ended May 31, 2007.
Number of Shares Amount Included
Underlying Options in Fiscal 2007
Date of Award (#) ($)
9/26/2005 5,400 42,125
9/25/2006 4,400 86,500
128,625
(2) On September 25, 2006, each outside director received a stock option for 4,400 shares of
common stock. The full grant date fair value of each such option, computed in accordance with
FAS 123R, was $127,308.
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(3) The following table sets forth the aggregate number of outstanding stock options held by each
outside director at May 31, 2007:
Options
Name Outstanding
J.L. Barksdale . . . . . . . . . . . . . . . . . . . . . . . . . 22,800
A.A. Busch IV . . . . . . . . . . . . . . . . . . . . . . . . . 26,150
J.A. Edwardson . . . . . . . . . . . . . . . . . . . . . . . . 30,800
J.L. Estrin . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,800
J.K. Glass . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,800
P. Greer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,800
J.R. Hyde, III . . . . . . . . . . . . . . . . . . . . . . . . . . 66,800
S.A. Jackson . . . . . . . . . . . . . . . . . . . . . . . . . . 24,800
S.R. Loranger . . . . . . . . . . . . . . . . . . . . . . . . . 4,400
C.T. Manatt . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,800
J.I. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,600
P.S. Walsh . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,800
P.S. Willmott . . . . . . . . . . . . . . . . . . . . . . . . . . 46,800
(4) Represents Mr. Manatt’s retirement benefit under the Retirement Plan for Outside Directors. For
additional information, see “— Retirement Plan for Outside Directors” above.
EQUITY COMPENSATION PLANS
Equity Compensation Plans Approved by Stockholders
Stockholders approved FedEx’s 1993, 1995, 1997, 1999 and 2002 Stock Incentive Plans, as
amended, and FedEx’s Incentive Stock Plan, as amended. Although options are still outstanding
under the 1993 and 1995 plans, no shares are available under these plans for future grants.
Equity Compensation Plans Not Approved by Stockholders
FedEx’s 2001 Restricted Stock Plan, as amended, was approved by the Board of Directors, but
was not approved by the stockholders. Under the terms of this plan, key employees may receive
restricted shares of common stock as determined by the Compensation Committee. Only treasury
shares may be issued under this plan. Restrictions on the shares typically expire over four years from
the award date. Holders of restricted shares are entitled to vote the shares and to receive any
dividends paid on the shares.
In connection with its acquisition of Caliber System, Inc. in January 1998, FedEx assumed
Caliber’s officers’ deferred compensation plan. This plan was approved by Caliber’s board of directors,
but not by Caliber’s or FedEx’s stockholders. Following FedEx’s acquisition of Caliber, Caliber stock
units under the plan were converted to FedEx common stock equivalent units. In addition, the
employer’s 50% matching contribution on compensation deferred under the plan was made in FedEx
common stock equivalent units. Subject to the provisions of the plan, distributions to participants with
respect to their stock units may be paid in shares of FedEx common stock on a one-for-one basis.
Effective January 1, 2003, no further deferrals or employer matching contributions will be made under
the plan. Participants may continue to acquire FedEx common stock equivalent units under the plan,
however, pursuant to dividend equivalent rights.
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Summary Table
The following table sets forth certain information as of May 31, 2007 with respect to
compensation plans under which shares of FedEx common stock may be issued:
Equity Compensation Plan Information
Number of Shares
Remaining Available for
Future Issuance Under
Number of Shares to be Weighted-Average Equity Compensation
Issued Upon Exercise of Exercise Price of Plans (Excluding Shares
Outstanding Options, Outstanding Options, Reflected in the
Plan Category Warrants and Rights Warrants and Rights First Column)
Equity compensation plans approved by
stockholders . . . . . . . . . . . . . . . . . . . 16,483,957(1) $68.53 6,820,879(2)
Equity compensation plans not approved
by stockholders . . . . . . . . . . . . . . . . . 10,154(3) N/A 267,173(4)
Total . . . . . . . . . . . . . . . . . . . . . . . 16,494,111 $68.53 7,088,052
(1) Represents shares of common stock issuable upon exercise of outstanding options granted under
FedEx’s stock option plans. This number does not include: (a) 106,444 shares of common stock
issuable upon exercise of outstanding options granted under plans assumed by FedEx in
acquisitions; (b) 7,880 shares of common stock issuable under a retirement plan assumed by
FedEx for former non-employee directors of Caliber System, Inc.; and (c) 38,798 shares of
common stock issuable under stock credit plans assumed by FedEx in the Caliber acquisition.
The weighted average exercise price of outstanding options granted under option plans assumed
in acquisitions as of May 31, 2007 was $21.17.
FedEx cannot make any additional awards under these assumed plans, but additional FedEx
common stock equivalent units may be issued to current participants under the assumed stock
credit plans pursuant to dividend equivalent rights.
(2) Includes 6,170,497 option shares available for future grants under FedEx’s stock option plans and
650,382 shares available for future restricted stock grants under FedEx’s Incentive Stock Plan, as
amended.
(3) Represents shares of FedEx common stock issuable pursuant to the officers’ deferred
compensation plan assumed by FedEx in the Caliber acquisition as described above.
(4) Includes 251,917 shares available for future grants under FedEx’s 2001 Restricted Stock Plan, as
amended. Only treasury shares may be issued under this plan. Also includes 15,256 shares under
FedEx’s 1997 Restricted Stock Plan, as amended. The 1997 Restricted Stock Plan terminated on
July 15, 2007, and no further grants may be made under this plan.
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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee assists the Board of Directors in its oversight of FedEx’s financial reporting
process. The Audit Committee’s responsibilities are more fully described in its charter, which is
available on the FedEx Web site at http://ir.fedex.com/governance/committeechar.cfm#audit.
Management has the primary responsibility for the financial statements and the financial reporting
process, including internal control over financial reporting. FedEx’s independent registered public
accounting firm is responsible for performing an audit of FedEx’s consolidated financial statements
and expressing an opinion on the fair presentation of those financial statements in conformity with
United States generally accepted accounting principles. The independent registered public accounting
firm also is responsible for performing an audit of and expressing an opinion on (i) management’s
assessment of the effectiveness of internal control over financial reporting and (ii) the effectiveness of
FedEx’s internal control over financial reporting.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with
management the audited consolidated financial statements for the fiscal year ended May 31, 2007,
including a discussion of, among other things: (i) the acceptability and quality of the accounting
principles; (ii) the reasonableness of significant accounting judgments and critical accounting policies
and estimates; (iii) the clarity of disclosures in the financial statements; and (iv) the adequacy and
effectiveness of FedEx’s financial reporting procedures and internal control structure, including
FedEx’s disclosure controls and procedures and internal control over financial reporting, and
management’s assessment and report on internal control over financial reporting. The Audit
Committee also discussed with the Chief Executive Officer and Chief Financial Officer of FedEx their
respective certifications with respect to FedEx’s Annual Report on Form 10-K for the fiscal year ended
May 31, 2007.
The Audit Committee reviewed and discussed with the independent registered public accounting
firm the audited consolidated financial statements for the fiscal year ended May 31, 2007, the firm’s
judgments as to the acceptability and quality of FedEx’s accounting principles and such other matters
as are required to be discussed with the Audit Committee under the standards of the Public Company
Accounting Oversight Board (United States), including those matters required to be discussed by
Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended. The
Audit Committee also reviewed and discussed with the independent registered public accounting firm
their audit of (i) management’s assessment of the effectiveness of internal control over financial
reporting and (ii) the effectiveness of FedEx’s internal control over financial reporting.
In addition, the Audit Committee has received from the independent registered public accounting
firm the written disclosures regarding the firm’s independence and the letter required by Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees, and has
discussed with the independent registered public accounting firm those disclosures and other matters
relating to the firm’s independence.
The Audit Committee discussed with FedEx’s internal auditor and independent registered public
accounting firm the overall scope and plans for their respective audits. The Audit Committee meets
with the internal auditor and the independent registered public accounting firm, with and without
management present, to discuss the results of their examinations, their evaluations of FedEx’s internal
controls and the overall quality of FedEx’s financial reporting.
In reliance on the reviews and discussions referred to above, and the receipt of unqualified
opinions from Ernst & Young LLP dated July 9, 2007, with respect to the consolidated financial
statements of FedEx as of and for the fiscal year ended May 31, 2007, and with respect to
management’s assessment of the effectiveness of internal control over financial reporting and the
effectiveness of FedEx’s internal control over financial reporting, the Audit Committee recommended
to the Board of Directors, and the Board approved, that the audited consolidated financial statements
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be included in FedEx’s Annual Report on Form 10-K for the fiscal year ended May 31, 2007, for filing
with the Securities and Exchange Commission.
Audit Committee Members
John A. Edwardson – Chairman
Steven R. Loranger
Joshua I. Smith
Peter S. Willmott
AUDIT AND NON-AUDIT FEES
The following table sets forth fees for services Ernst & Young LLP provided to FedEx during fiscal
2007 and 2006:
2007 2006
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,401,000 $12,594,000
Audit-related fees . . . . . . . . . . . . . . . . . . . . . . . . . . 637,000 486,000
Tax fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598,000 370,000
All other fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 20,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,651,000 $13,470,000
• Audit Fees. Represents fees for professional services provided for the audit of FedEx’s
annual financial statements, the audit of FedEx’s internal control over financial reporting
under Section 404 of the Sarbanes-Oxley Act of 2002, the review of FedEx’s quarterly
financial statements and audit services provided in connection with other statutory or
regulatory filings.
• Audit-Related Fees. Represents fees for assurance and other services related to the audit
of FedEx’s financial statements. The fees for fiscal 2007 and 2006 were primarily for benefit
plan audits.
• Tax Fees. Represents fees for professional services provided primarily for domestic and
international tax compliance and advice. Tax compliance and preparation fees totaled
$15,000 and $34,000 in fiscal 2007 and 2006, respectively.
• All Other Fees. Represents fees for products and services provided to FedEx not otherwise
included in the categories above. The amounts shown for fiscal 2007 and 2006 include fees
for online technical resources.
FedEx’s Audit Committee has determined that the provision of non-audit services by Ernst &
Young is compatible with maintaining Ernst & Young’s independence.
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PROPOSAL 2 – RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Appointment of Independent Registered Public Accounting Firm
Ernst & Young LLP audited FedEx’s annual financial statements for the fiscal year ended May 31,
2007. The Audit Committee has appointed Ernst & Young to be FedEx’s independent registered public
accounting firm for the fiscal year ending May 31, 2008. The stockholders are asked to ratify this
appointment at the annual meeting. Representatives of Ernst & Young will be present at the meeting
to respond to appropriate questions and to make a statement if they so desire.
Policies Regarding Independent Auditor
The Audit Committee is directly responsible for the appointment, compensation and oversight of
the independent registered public accounting firm. To help ensure the independence of the
independent registered public accounting firm, the Audit Committee has adopted two policies: the
Policy on Engagement of Independent Auditor and the Policy on Hiring Certain Employees and
Partners of the Independent Auditor.
Pursuant to the Policy on Engagement of Independent Auditor, the Audit Committee preapproves
all audit services and non-audit services to be provided to FedEx by its independent registered public
accounting firm. The Audit Committee may delegate to one or more of its members the authority to
grant the required approvals, provided that any exercise of such authority is presented at the next
Audit Committee meeting.
The Audit Committee may preapprove for up to one year in advance the provision of particular
types of permissible routine and recurring audit-related, tax and other non-audit services, in each case
described in reasonable detail and subject to a specific annual monetary limit also approved by the
Audit Committee. The Audit Committee must be informed about each such service that is actually
provided. In cases where a service is not covered by one of those approvals, the service must be
specifically preapproved by the Audit Committee no earlier than one year prior to the commencement
of the service.
Each audit or non-audit service that is approved by the Audit Committee (excluding tax services
performed in the ordinary course of FedEx’s business) will be reflected in a written engagement letter
or writing specifying the services to be performed and the cost of such services, which will be signed
by either a member of the Audit Committee or by an officer of FedEx authorized by the Audit
Committee to sign on behalf of FedEx.
The Audit Committee will not approve any prohibited non-audit service or any non-audit service
that individually or in the aggregate may impair, in the Audit Committee’s opinion, the independence of
the independent registered public accounting firm.
In addition, FedEx’s independent registered public accounting firm may not provide any services,
including financial counseling and tax services, to any FedEx officer, Audit Committee member or
FedEx managing director (or its equivalent) in the Finance department or to any immediate family
member of any such person. The Policy on Engagement of Independent Auditor is available on
FedEx’s Web site at http://ir.fedex.com/governance/Auditor_Policy.cfm.
Pursuant to the Policy on Hiring Certain Employees and Partners of the Independent Auditor,
FedEx will not hire a person who is concurrently a partner or other professional employee of the
independent registered public accounting firm or, in certain cases, an immediate family member of
such a person. Additionally, FedEx will not hire a former partner or professional employee of the
independent registered public accounting firm in an accounting role or a financial reporting oversight
role if he or she remains in a position to influence the independent registered public accounting firm’s
operations or policies, has capital balances in the independent registered public accounting firm or
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maintains certain other financial arrangements with the independent registered public accounting firm.
FedEx will not hire a former member of the independent registered public accounting firm’s audit
engagement team (with certain exceptions) in a financial reporting oversight role without waiting for a
required “cooling-off” period to elapse.
FedEx’s Executive Vice President and Chief Financial Officer will approve any hire who was
employed during the preceding three years by the independent registered public accounting firm, and
will annually report all such hires to the Audit Committee.
Vote Required For Ratification
The Audit Committee is responsible for selecting FedEx’s independent registered public accounting
firm. Accordingly, stockholder approval is not required to appoint Ernst & Young as FedEx’s independent
registered public accounting firm for fiscal year 2008. The Board of Directors believes, however, that
submitting the appointment of Ernst & Young to the stockholders for ratification is a matter of good
corporate governance. If the stockholders do not ratify the appointment, the Audit Committee will review
its future selection of the independent registered public accounting firm.
The ratification of the appointment of Ernst & Young as FedEx’s independent registered public
accounting firm requires the affirmative vote of a majority of the shares present at the meeting in
person or by proxy and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
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PROPOSAL 3 – STOCKHOLDER PROPOSAL: SEPARATION OF CHAIRMAN AND CEO ROLES
FedEx is not responsible for the content of this stockholder proposal or supporting statement.
FedEx has been notified that the International Brotherhood of Teamsters General Fund, 25
Louisiana Avenue, N.W., Washington, D.C. 20001, the beneficial owner of 176 shares of FedEx
common stock, intends to present the following proposal for consideration at the annual meeting:
“RESOLVED: That the shareholders of FedEx Corporation (“Company”) urge the Board of Directors to
take the necessary steps to amend the by-laws to require that, subject to any presently existing
contractual obligations of the Company, the Chairman of the Board of Directors shall not concurrently
serve as the Chief Executive Officer.
SUPPORTING STATEMENT: The Board of Directors is elected by shareholders to oversee
management and its Chairman provides leadership for the Board. The Business Roundtable has
noted that “the paramount duty of the Board of Directors is to select a Chief Executive Officer [CEO]
and to oversee the CEO and other senior management . . .” The Business Roundtable, Principles of
Corporate Governance, May 2002.
To be effective, a Board of Directors must be led by a Chair who is independent of management
because, we believe, having the same individual serve as both Chairman and CEO necessarily
impairs the Chair’s ability to hold the CEO accountable.
Our Company’s Chairman, Mr. Fred Smith, is also its CEO.
Under Mr. Smith’s leadership, our Company has pursued a questionable business tactic of utilizing
“independent contractors,” which has led to state and federal investigations. Thus far, the California
Employment Development Department, Massachusetts Department of Workforce Development, New
Jersey Department of Labor and Workforce Development, U.S. District Court of Western Washington,
and Oregon Employment Department have ruled that these workers were misclassified.
Financial liability of the California state-led case is at least $8 million.1 Liability could be substantially
higher as these and new state-led cases of misclassification of workers as independent contractors
advance.2 Consequently, we are concerned about lack of Board oversight.
The Conference Board issued a report addressing the separation of CEO and Chair positions by a
Commission, including John Snow, former U.S. Treasury Secretary; Arthur Levitt Jr., former SEC
Chairman; and, former Federal Reserve System Chairman, Paul Volcker. The report stated:
The primary concern in many of these situations is that strong CEOs appear to have
exerted a dominant influence over their boards, often stifling the efforts of directors to
play the central oversight role needed to ensure a healthy system of corporate
governance . . . .
The Commission recommends that each corporation give careful consideration, based
on its particular circumstances, to separating the offices of the Chairman and CEO.
The Commission believes that separating the positions of Chairman and CEO is fully
consistent with the objectives of the [Sarbanes-Oxley] Act, the proposed New York
Stock Exchange listing requirements, and the proposed NASDAQ requirements, and
that separating the roles of Chairman and CEO enhances implementation of the Act
and stock exchange reforms. [The Conference Board Commission on Public Trust and
Private Enterprise, Findings and Recommendations, Jan. 9, 2003.]
1
California Unemployment Insurance Appeals Board case 1485661.
2
Current cases pending include multi-district litigation in the U.S. District Court for Northern Indiana.
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We urge your support FOR this proposal, which would restore balance between the Chair and CEO
functions by requiring that the Chair of the Board not also serve as the CEO.”
Board of Directors’ Statement in Opposition
The Board of Directors and its Nominating & Governance Committee have considered this
proposal and concluded that its adoption is unnecessary and not in the best interests of our
stockholders.
FedEx and its stockholders are best served by having Mr. Frederick W. Smith, FedEx’s
founder, serve as both Chairman of the Board of Directors and Chief Executive Officer.
FedEx’s bylaws provide that the Chairman of the Board shall be the Chief Executive Officer, unless
the Board of Directors designates a different officer as Chief Executive Officer. This approach
provides the Board with the necessary flexibility to determine whether the positions should be held by
the same person or by separate persons based on the leadership needs of FedEx at any particular
time. The Board has given careful consideration to separating the roles of Chairman and Chief
Executive Officer and has determined that FedEx and its stockholders are best served by having
Mr. Smith, FedEx’s founder, serve as both Chairman of the Board of Directors and Chief Executive
Officer. Mr. Smith’s combined role as Chairman and Chief Executive Officer promotes unified
leadership and direction for the Board and executive management and it allows for a single, clear
focus for the chain of command to execute FedEx’s strategic initiatives and business plans.
Mr. Smith has served as both Chairman of the Board and Chief Executive Officer of FedEx since
1977. Mr. Smith is the pioneer of the express transportation industry and his record of innovation,
achievement and leadership speaks for itself. Under Mr. Smith’s leadership, FedEx has become one
of the most trusted and respected brands in the world. FedEx has consistently been ranked in
FORTUNE magazine’s industry lists, including “World’s Most Admired Companies” and “America’s
Most Admired Companies.” In addition, Mr. Smith was named Chief Executive magazine’s CEO of the
Year in 2004. Under Mr. Smith’s leadership, FedEx has also experienced strong financial growth and
stockholder return. FedEx’s compound annual growth rates for revenue, earnings per share and stock
price since its initial public offering in 1978 are approximately 20%, 13% and 19%, respectively. The
Board of Directors believes that our stockholders have been well served by having Mr. Smith act as
both Chairman and Chief Executive Officer.
FedEx’s strong and independent Board of Directors effectively oversees our management
and provides vigorous oversight of FedEx’s business and affairs. The Board of Directors is
composed of independent, active and effective directors. Twelve out of the fourteen current directors
meet the independence requirements of the New York Stock Exchange, the Securities and Exchange
Commission and the Board’s standards for determining director independence. Twelve out of the
fourteen director nominees meet such independence requirements. Mr. Smith is the only member of
executive management who is also a director.
Separation of the Chairman of the Board and Chief Executive Officer roles is not necessary to
ensure that our Board provides independent and effective oversight of FedEx’s business and affairs.
Such oversight is maintained at FedEx through the composition of our Board, the strong leadership of
our independent directors and Board committees, and our highly effective corporate governance
structures and processes already in place.
The Board of Directors and its committees vigorously oversee the effectiveness of
management policies and decisions, including the execution of key strategic initiatives. Each of the
Audit, Compensation and Nominating & Governance Committees is composed entirely of
independent directors. Consequently, independent directors directly oversee such critical matters as
the integrity of FedEx’s financial statements, the compensation of executive management, including
Mr. Smith’s compensation, the selection and evaluation of directors, and the development and
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implementation of corporate governance programs. The Compensation Committee, together with
the other independent directors, conducts an annual performance review of the Chairman and Chief
Executive Officer, assessing FedEx’s financial and non-financial performance and the quality and
effectiveness of Mr. Smith’s leadership. In addition, the Nominating & Governance Committee
oversees the processes by which Mr. Smith is evaluated.
The Board believes that FedEx’s Corporate Governance Guidelines, which are available on the
FedEx Web site, help ensure that strong and independent directors will continue to play the central
oversight role necessary to maintain FedEx’s commitment to the highest quality corporate
governance. Pursuant to these governance principles, non-management Board members meet at
regularly scheduled executive sessions without management present and, at least once a year, such
meetings include only the independent directors. The Chairman of the Nominating & Governance
Committee presides over these meetings. Each Board member is free to suggest the inclusion of
items on the agenda for Board meetings or raise subjects that are not on the agenda for that meeting.
In addition, the Board and each Board committee has complete and open access to any member of
management and the authority to retain independent legal, financial and other advisors as they deem
appropriate.
Finally, we take issue with the proponent’s irrelevant and clearly self-serving reference to
the purported class-action lawsuits and other proceedings that claim that FedEx Ground’s
owner-operators should be treated as employees and not independent contractors. Our Board of
Directors has reviewed FedEx Ground’s independent contractor model and closely monitors the status
of these proceedings. The independent contractor model has been in place since the inception of the
company as RPS in 1985 and was in place at the time we acquired Caliber System, Inc. in January
1998. Throughout FedEx Ground’s history, more than 120 agencies and courts, including United
States federal courts, have upheld the FedEx Ground independent contractor model. We strongly
believe that FedEx Ground’s owner-operators are properly classified as independent contractors, and
we continue to vigorously defend ourselves in these proceedings. FedEx Ground’s use of independent
contractors is well suited to the needs of the ground delivery business and its customers, which is
reflected by FedEx Ground’s continuing growth. We will continue to do whatever is necessary to
protect the company’s ability to operate with independent contractors and to provide our customers
with the outstanding level of service they expect.
In sum, the Board believes that FedEx and its stockholders have been and continue to be well
served by having Mr. Smith serve as both Chairman of the Board and Chief Executive Officer. The
current leadership model, when combined with the current composition of the Board and the other
elements of our governance structure, strikes an appropriate balance between strong and consistent
leadership and independent oversight of FedEx’s business and affairs. This proposal is clearly an
attempt by the proponent to advance its own self-interest, which is inconsistent with the best interests
of FedEx and its stockholders as a whole. Accordingly, we recommend that you vote against this
proposal.
Vote Required for Approval
If this proposal is properly presented at the meeting, approval requires the affirmative vote of a
majority of the shares present at the meeting in person or by proxy and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THIS
PROPOSAL.
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PROPOSAL 4 – STOCKHOLDER PROPOSAL: SHAREHOLDER VOTE ON EXECUTIVE PAY
FedEx is not responsible for the content of this stockholder proposal or supporting statement.
FedEx has been notified that John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach,
California 90278, the beneficial owner of 100 shares of FedEx common stock, intends to present the
following proposal for consideration at the annual meeting:
“4 – Shareholder Vote on Executive Pay
RESOLVED, shareholders urge our board to adopt a policy that shareholders be given the opportunity
at each annual shareholder meeting to vote on a management advisory resolution to ratify the
compensation of the Named Executive Officers (NEOs) published in the proxy statement’s Summary
Compensation Table (SCT) and the accompanying narrative disclosure of material factors provided to
understand the SCT (but not the Compensation Discussion and Analysis). The proposal submitted to
shareholders should make clear that the vote is non-binding and would not affect any compensation
paid or awarded to any NEO.
Investors are increasingly concerned about mushrooming executive compensation which sometimes
appears to be insufficiently aligned with the creation of shareholder value. Media and government
focus on back dating of stock options has increased investor concern. This proposed reform can help
rebuild investor confidence.
The need for adoption of this proposal should also be evaluated in the context of our company’s
overall corporate governance. For instance in 2007 the following governance status was reported (and
certain concerns are noted):
• The Corporate Library (TCL) http://www.thecorporatelibrary.com/ an independent investment
research firm rated our company:
“Very High Concern” in Overall Board effectiveness.
“High Concern” in CEO Compensation.
“High” in Overall governance risk assessment.
• We had no Independent Chairman and not even a Lead Director – Independent oversight
concern.
• There are too many active CEOs on our board with 6 – Over-commitment Concern.
• Our full board had only 6 meetings in an entire year.
• Six directors had 18 to 36 years tenure – Independence concern
• Directors with 33-years director tenure each chaired our key compensation and nomination
committees:
1) Mr. Greer
2) Mr. Willmott
• Our directors served on boards rated “D” by the Corporate Library:
1) Mr. Busch Anheuser-Busch (BUD) D-rated
2) Mr. Barksdale Time Warner (TWX) D-rated
Mr. Barksdale was also involved with accelerated vesting.
• Following a review of the FedEx board, The Corporate Library (TCL) reaffirmed its overall
Rating of “D” for our board. FedEx is in the high risk category due to concerns related to CEO
Compensation and related party transactions with the Chairman and CEO, as well as with other
members of the board.
• FedEx currently reimburses officers for any tax due on restricted stock awards. According to
TCL it cannot be said often enough that tax reimbursement should play no part in executive
compensation policy.
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Accordingly, the board should allow shareholders to express their opinion about senior executive
compensation at our company by establishing an annual referendum process. The results of such a
vote would provide the board and management with useful information about whether shareholders
view the company’s senior executive compensation, as reported each year, are in shareholders’ best
interests.
Shareholder Vote on Executive Pay
Yes on 4”
Board of Directors’ Statement in Opposition
The Board of Directors and its Compensation and Nominating & Governance Committees have
considered this proposal and concluded that it is unnecessary and not in the best interests of our
stockholders.
Our stockholders already have a direct and effective method to express their views
regarding executive compensation. An advisory vote is not necessary because our stockholders
already have an efficient and effective method of communicating directly with our Board of Directors
and its Compensation Committee. Stockholders may communicate with any member or committee of
our Board of Directors (including the Compensation Committee or the Board generally) as described
on page 12 under the heading “Corporate Governance Matters — Communications with Directors.” By
contacting our Board or members of the Compensation Committee directly, stockholders can more
specifically, clearly and accurately express any observations or concerns regarding FedEx’s
compensation policies and practices directly to those charged with designing FedEx’s executive
compensation program. An advisory vote does not provide that level of communication.
Our executive compensation structure promotes the best interests of our stockholders.
As discussed under the heading “Compensation Discussion and Analysis” beginning on page 21,
FedEx has a carefully crafted executive compensation program that rewards executives for their
performance and aligns their interests with those of FedEx’s stockholders. This program is designed
and administered by the Compensation Committee, which is composed entirely of independent
directors. The Compensation Committee regularly monitors each component of FedEx’s executive
compensation program and adopts changes as appropriate to reflect the dynamic, global marketplace
in which FedEx competes for talented executives. In addition, the Compensation Committee has
retained an independent executive compensation consultant, which reports directly to the
Compensation Committee and assists the Compensation Committee in evaluating FedEx’s executive
compensation. The Board believes that FedEx’s compensation structure for executive officers
promotes the best interests of FedEx and its stockholders by enabling FedEx to retain and attract
highly qualified and productive executive officers, while ensuring that they are compensated in such a
manner as to sustain and enhance long-term stockholder value.
An advisory vote would undermine our highly effective executive compensation program
to the detriment of our stockholders. FedEx’s global recognition and reputation for excellence in
management and leadership make our employees attractive targets for other companies and our
executives are aggressively recruited. The Board of Directors and its Compensation Committee have
a duty to our stockholders to ensure that our overall compensation program competes well against all
types of companies — in our industry and in others — and continues to retain and attract highly
qualified and effective executive officers. The proposed advisory vote could create the impression
among our executives, as well as by executives whom we may recruit, that their compensation
opportunities at FedEx could be limited, especially as compared with opportunities at other companies
that have not adopted this practice. If adopted, the proposal would only apply to FedEx and no other
company and could have the effect of undermining the Board’s and Compensation Committee’s efforts
to retain and attract highly talented executives to the detriment of our stockholders.
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An advisory vote would not effectively convey meaningful stockholder opinions regarding
executive compensation. The proposed advisory vote would not provide our Board of Directors or
its Compensation Committee with any meaningful insight into specific stockholder concerns regarding
executive compensation that they could address when considering FedEx’s compensation policies and
practices. It is simply a vote to approve the Summary Compensation Table and related narrative
disclosure. Such an advisory vote would not effectively communicate any particular stockholder views
about our executive compensation programs and would not provide our Board or its Compensation
Committee with any clear indication of, or context necessary to interpret, the meaning of the vote. The
proposed advisory vote would therefore not provide any benefit to our stockholders, nor would it
provide any useful information to our Board or its Compensation Committee.
For the reasons set forth above we recommend that you vote against this proposal.
Vote Required for Approval
If this proposal is properly presented at the meeting, approval requires the affirmative vote of a
majority of the shares present at the meeting in person or by proxy and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THIS
PROPOSAL.
PROPOSAL 5 – STOCKHOLDER PROPOSAL: GLOBAL WARMING REPORT
FedEx is not responsible for the content of this stockholder proposal or supporting statement.
FedEx has been notified that the Free Enterprise Action Fund, 12309 Briarbush Lane, Potomac,
Maryland 20854, the beneficial owner of 261 shares of FedEx common stock, intends to present the
following proposal for consideration at the annual meeting:
“Global Warming Report
Resolved: The shareholders request the Board of Directors to report on the scientific and economic
analyses relevant to FedEx’s environmental policy concerning greenhouse gases, omitting proprietary
information and at reasonable cost.
This report should discuss the:
1. Specific scientific data and studies relied on to formulate FedEx’s greenhouse gas policy.
2. Extent to which FedEx believes human activity will significantly alter global climate, whether
such change is necessarily undesirable and whether a cost-effective strategy for mitigating
any undesirable change is practical.
3. Estimates of costs and benefits to FedEx of its greenhouse gas policy.
Supporting Statement:
FedEx’s main responsibility is to create shareholder value — not to help environmental activist groups
implement their anti-business social and political agendas.
FedEx says it is committed to minimizing its greenhouse gas (GHG) emissions and touts its
relationship with Environmental Defense, an environmental activist group whose agenda includes
regulation of GHG emissions.
FedEx is working with Environmental Defense to develop hybrid electrically-powered trucks. But such
trucks cost more than conventional trucks without providing commensurate benefits to the
Company — as CEO Frederick Smith admitted at the 2006 annual general meeting. Further, it is not
clear that such hybrid trucks provide any significant environmental benefits whatsoever.
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Moreover, laws and regulations limiting GHG emissions are expected to reduce economic growth and
to increase energy costs — both of which may adversely impact FedEx’s earnings.
FedEx’s direct and/or indirect support for mandatory GHG regulation could harm shareholder value
without providing any benefit to the environment.”
Board of Directors’ Statement in Opposition
The Board of Directors and its Nominating & Governance Committee have considered this
proposal and concluded that its adoption would not be in the best interests of our stockholders.
Our environmental initiatives are designed to create and sustain long-term stockholder
value by reducing our reliance on fuel and traditional energy sources and mitigating our
exposure to potential price increases and supply shortages. We certainly agree that our main
responsibility is to create and sustain long-term stockholder value. The purpose (and, we believe, the
effect) of our environmental policy decisions is precisely to fulfill that responsibility. While our
environmental initiatives have the effect of protecting the environment and advancing the cause of
environmental advocates who share our belief in effective environmental and business policy, we
undertake the initiatives for business reasons. Not only are our initiatives good for the environment,
they are in the best interests of FedEx and our stockholders.
We must purchase large quantities of fuel and other forms of energy to operate our aircraft,
vehicles and facilities. In anticipation of potential price increases, supply shortages or disruptions and
more stringent regulatory requirements, we have a duty to our stockholders to proactively find
opportunities to reduce our reliance on fuel and other traditional energy sources — by increasing our
fuel and energy efficiency and exploring the use of alternative energy sources. The purpose of these
endeavors is not to “help environmental activist groups implement their anti-business social and
political agendas” as the proponent suggests. Rather, by increasing our fuel and energy efficiency, we
can improve profitability and mitigate our exposure to future price increases or supply shortages.
Reduced fuel and energy usage also has the effect of reducing greenhouse gas emissions.
We invest in an appropriate amount of research and development of innovations and
technologies that are designed to increase our fuel and energy efficiency, thereby reducing
our fuel and energy consumption and reducing atmospheric emissions. As described in our
environmental policy statement (which is available on the FedEx Web site at http://www.fedex.com/us/
about/responsibility/environment.html ), FedEx is committed to using innovations and technologies to
minimize atmospheric emissions (including greenhouse gases). We reduce greenhouse gases by
increasing our fuel and energy efficiency, thereby reducing our fuel and energy consumption. For
example:
• The FedEx Express OptiFleet E700 hybrid electric vehicle not only decreases particulate
emissions by over 90 percent and decreases greenhouse gas emissions by over 25 percent,
but also increases fuel economy by over 40 percent. FedEx Express currently operates 93
hybrid vehicles in North America, with more than 1 million miles in revenue service.
• In August 2005, we opened California’s then largest corporate solar electric rooftop system
atop the FedEx Express regional hub in Oakland. Besides being environmentally friendly, it is
intended to reduce our long-term costs for energy in California and hedge against future
increases in energy costs. To date, this solar electric system has provided approximately two
billion watt hours of renewable energy generated by sunlight — electricity we would have
purchased otherwise.
• We are modernizing our aircraft fleet. For example, we are retiring and replacing older
Boeing 727s with more efficient Boeing 757s, which are 20 percent larger but use 36 percent
less fuel. We are also adding the Boeing 777 freighter to our fleet for long-haul flights, which
will allow us to carry more payload while burning 18 percent less fuel compared to the
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aircraft in today’s fleet. The use of newer and more fuel efficient aircraft will have the effect of
not only reducing greenhouse gas emissions and airport noise, but also increasing our jet
fuel efficiency.
With respect to FedEx’s use of hybrid trucks, the proponent asserts that Mr. Smith, our Chairman,
President and Chief Executive Officer, “admitted” at the 2006 annual meeting of FedEx’s stockholders
that such trucks cost more than conventional trucks “without providing commensurate benefits to the
Company.” At the annual meeting, Mr. Smith acknowledged that hybrid vehicles are not cost-effective
yet from a return on invested capital standpoint versus conventionally powered vehicles. Mr. Smith
then stated, however, that it would be imprudent for FedEx not to invest appropriately in research and
development in the event that hybrid technology becomes more cost-effective, given that hybrid
vehicles reduce fuel consumption by over 40 percent compared to our existing gasoline and diesel
powered vehicles.
The proposed report would be an imprudent use of corporate assets and would not be
useful to our stockholders. The specific scientific data requested by this proposal is not obtained
by FedEx in the ordinary course of business. As a result, adoption of this proposal would require
FedEx to spend a significant amount of capital resources to hire climatologists, purchase scientific
equipment and conduct numerous and complex surveys in order to prepare and publish a report on
the extent to which “human activity will significantly alter global climate.” The feasibility, cost and
burden of gathering and publishing the volume and depth of the information requested by this
proposal would not be an appropriate use of our corporate assets and the information disclosed in
such a report would not be useful to our stockholders.
In sum, this proposal is unnecessary. All of our environmental policy decisions promote and
protect the economic future of FedEx, our stockholders and employees. We do not believe that
FedEx’s resources are best spent preparing and publishing a “global warming report” which will not be
useful to our stockholders. Accordingly, we recommend that you vote against this proposal.
Vote Required for Approval
If this proposal is properly presented at the meeting, approval requires the affirmative vote of a
majority of the shares present at the meeting in person or by proxy and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THIS PROPOSAL.
PROPOSAL 6 – STOCKHOLDER PROPOSAL: POLITICAL CONTRIBUTIONS REPORT
FedEx is not responsible for the content of this stockholder proposal or supporting statement.
FedEx has been notified that Walden Asset Management, One Beacon Street, Boston,
Massachusetts 02108, the beneficial owner of 74,855 shares of FedEx common stock, intends to
present the following proposal for consideration at the annual meeting. Co-filers of the proposal are
the Sisters of Notre Dame de Namur, 85 Ocean Street, Dorchester, Massachusetts 02124, the
beneficial owner of 975 shares of FedEx common stock, the Tides Foundation, P.O. Box 29903,
San Francisco, California 94129, the beneficial owner of 4,600 shares of FedEx common stock, and
Boston Common Asset Management, 84 State Street, Suite 1000, Boston, Massachusetts 02109, the
beneficial owner of 25,550 shares of FedEx common stock.
“Corporate political contributions and trade association payments
Resolved, that the shareholders of FedEx (“Company”) hereby request that the Company provide
a report, updated semi-annually, disclosing the Company’s:
1. Policies and procedures for political contributions and expenditures (both direct and indirect)
made with corporate funds.
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2. Monetary and non-monetary political contributions and expenditures not deductible under
section 162 (e)(1)(B) of the Internal Revenue Code, including but not limited to contributions
to or expenditures on behalf of political candidates, political parties, political committees and
other political entities organized and operating under 26 USC Sec. 527 of the Internal
Revenue Code, and any portion of any dues or similar payments made to any tax exempt
organization that is used for an expenditure or contribution if made directly by the corporation
would not be deductible under section 162 (e)(1)(B) of the Internal Revenue Code. The
report shall include the following:
a. An accounting of the Company’s funds that are used for political contributions or
expenditures as described above;
b. Identification of the person or persons in the Company who participated in making the
decisions to make the political contribution or expenditure; and
c. The internal guidelines or policies, if any, governing the Company’s political contributions
and expenditures.
The report shall be presented to the board of directors’ audit committee or other relevant
oversight committee and posted on the company’s website to reduce costs to shareholders.
Stockholder Supporting Statement
As long-term shareholders of FedEx, we support policies that apply transparency and
accountability to corporate spending on political activities. Such disclosure is consistent with public
policy and in the best interest of the Company’s shareholders.
Company executives exercise wide discretion over the use of corporate resources for political
activities. These decisions involve political contributions, called “soft money,” and payments to trade
associations and related groups that are used for political activities.
Moreover, payments to trade associations used for political activities are undisclosed and
unknown. These activities include direct and indirect political contributions to candidates, political
parties or political organizations; independent expenditures; or electioneering communications on
behalf of a federal, state or local candidate. The result is that shareholders and, in many cases,
management do not know how trade associations use their company’s money for political purposes.
The proposal asks the Company to disclose its political contributions and payments to trade
associations and other tax exempt organizations.
Absent a system of accountability, company assets can be used for political objectives that are
not shared by and may be inimical to the interests of the Company and its shareholders. Relying on
publicly available data does not provide a complete picture of the Company’s political expenditures.
The Company’s Board and its shareholders need complete disclosure to be able to fully evaluate the
political use of corporate assets. Thus, we urge your support for this critical governance reform.”
Board of Directors’ Statement in Opposition
The Board of Directors and its Nominating & Governance Committee have considered this
proposal and concluded that its adoption would not be in the best interests of our stockholders.
The Board believes it is in the best interests of our stockholders for FedEx to be an effective
participant in the political process. We are subject to extensive regulation at the federal and state
levels and are involved in a number of legislative initiatives in a broad spectrum of policy areas that
can have an immediate and dramatic effect on our operations. We promote legislative and regulatory
actions that further the business objectives of FedEx and attempt to protect FedEx from
unreasonable, unnecessary or burdensome legislative or regulatory actions at all levels of
government. As more fully described in our policy regarding political contributions (which is available
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on the FedEx Web site at http://ir.fedex.com/governance/contributions.cfm), we actively participate in
the political process with the ultimate goal of promoting and protecting the economic future of FedEx
and our stockholders and employees.
An important part of participating effectively in the political process is making prudent political
contributions — but only where permitted by applicable law. Political contributions of all types are
subject to extensive governmental regulation and public disclosure requirements, and FedEx is fully
committed to complying with all applicable campaign finance laws. For example, corporate
contributions are subject to certain limitations at the federal level, and we make none. While some
states allow corporate contributions to candidates or political parties, it is FedEx’s policy not to make
such contributions. FedEx also does not make corporate contributions to groups organized under
section 527 of the Internal Revenue Code, except to the organizational committees of the Democratic
and Republican national party conventions and the annual Democratic and Republican Governor’s
conferences. These limited corporate political contributions are approved by the Corporate Vice
President of Government Affairs, in consultation with appropriate members of FedEx senior
management. The Executive Vice President and General Counsel provides periodic updates to the
Board of Directors on FedEx’s political activities, including corporate contributions. As a result of these
policies and mandatory public disclosure requirements, the Board has concluded that ample public
information exists regarding FedEx’s political contributions to alleviate the concerns cited in this
proposal.
FedEx also provides an opportunity for its employees to participate in the political process by
joining FedEx’s non-partisan political action committee (“FedExPAC”). FedExPAC allows our
employees to pool their financial resources to support federal, state and local candidates, political
party committees and political action committees. The political contributions made by FedExPAC are
funded entirely by the voluntary contributions of our employees. No corporate funds are used. A
committee composed of appropriate members of FedEx senior management decides which
candidates, campaigns and committees FedExPAC will support based on a nonpartisan effort to
advance and protect the interests of FedEx and our stockholders and employees. Moreover,
FedExPAC’s activities are subject to comprehensive regulation by the federal government, including
detailed disclosure requirements, which include monthly reports with the Federal Election
Commission. These reports are publicly available and include an itemization of FedExPAC’s receipts
and disbursements, including any political contributions, over $200.
We take issue with the proponent’s suggestion that our political contributions, including payments
to trade associations, may fund agendas that are adverse to FedEx and our stockholders. Our
participation in the political process is designed to promote and protect the economic future of FedEx
and our stockholders and employees, and we make political contributions and maintain memberships
with a variety of trade associations expressly for that purpose. We have in place effective reporting
and compliance procedures to ensure that our political contributions are made in accordance with
applicable law and we closely monitor the appropriateness and effectiveness of the political activities
undertaken by the most significant trade associations in which we are a member.
Finally, the Board believes that the expanded disclosure requested in this proposal could place
FedEx at a competitive disadvantage by revealing its strategies and priorities. Because parties with
interests adverse to FedEx also participate in the political process to their business advantage, any
unilateral expanded disclosure could benefit those parties while harming the interests of FedEx and
our stockholders. The Board believes that any reporting requirements that go beyond those required
under existing law should be applicable to all participants in the process, rather than FedEx alone (as
the proponent requests).
In short, we believe that this proposal is duplicative and unnecessary, as a comprehensive
system of reporting and accountability for political contributions already exists. If adopted, the proposal
would apply only to FedEx and to no other company and would cause FedEx to incur undue cost and
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administrative burden, as well as competitive harm, without commensurate benefit to our stockholders.
Accordingly, we recommend that you vote against this proposal.
Vote Required for Approval
If this proposal is properly presented at the meeting, approval requires the affirmative vote of a
majority of the shares present at the meeting in person or by proxy and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THIS
PROPOSAL.
OTHER MATTERS
FedEx’s Bylaws require stockholders to give advance notice of any proposal intended to be
presented at the annual meeting. The deadline for this notice has passed and we have not received
any such notices. If any other matter properly comes before the stockholders for a vote at the
meeting, however, the proxy holders will vote your shares in accordance with their best judgment.
ADDITIONAL INFORMATION
Proxy Solicitation
FedEx will bear all costs of this proxy solicitation. In addition to soliciting proxies by this mailing,
we expect that our directors, officers and regularly engaged employees may solicit proxies personally
or by mail, telephone, facsimile or other electronic means, for which solicitation they will not receive
any additional compensation. FedEx will reimburse brokerage firms, custodians, fiduciaries and other
nominees for their out-of-pocket expenses in forwarding solicitation materials to beneficial owners
upon our request. FedEx has retained Morrow & Co., Inc. to assist in the solicitation of proxies for a
fee of $10,000 plus reimbursement of certain disbursements and expenses.
Householding
We have adopted a procedure approved by the Securities and Exchange Commission called
“householding.” Under this procedure, stockholders of record who have the same address and last
name and do not participate in electronic delivery will receive only one copy of this proxy statement
and the 2007 Annual Report to Stockholders, unless contrary instructions have been received from
one or more of these stockholders. This procedure will reduce our printing costs and postage fees.
Stockholders who participate in householding will continue to receive separate proxy cards. Also,
householding will not in any way affect dividend check mailings.
If you are eligible for householding, but you and other stockholders of record with whom you
share an address currently receive multiple copies of our annual report or proxy statement, or if you
hold stock in more than one account, and in either case you wish to receive only a single copy of our
annual report or proxy statement for your household, please contact our transfer agent,
Computershare Trust Company, N.A. (in writing: P.O. Box 43069, Providence, Rhode Island
02940-3069; by telephone: in the U.S. or Canada, 1-800-446-2617; outside the U.S. or Canada,
1-781-575-2723).
If you participate in householding and wish to receive a separate copy of this proxy statement or
the 2007 Annual Report, or if you do not wish to participate in householding and prefer to receive
separate copies of future annual reports or proxy statements, please contact Computershare as
indicated above. A separate copy of this proxy statement and the 2007 Annual Report will be
delivered promptly upon request.
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Beneficial owners of shares held in street name can request information about householding from
their banks, brokerage firms or other holders of record.
Stockholder Proposals for 2008 Annual Meeting
Stockholder proposals intended to be presented at FedEx’s 2008 annual meeting must be
received by FedEx no later than April 15, 2008 to be eligible for inclusion in FedEx’s proxy statement
and form of proxy for next year’s meeting. Proposals should be addressed to FedEx Corporation,
Attention: Corporate Secretary, 942 South Shady Grove Road, Memphis, Tennessee 38120.
For any proposal that is not submitted for inclusion in next year’s proxy statement (as described
in the preceding paragraph), but is instead sought to be presented directly at the 2008 annual
meeting, including nominations of director candidates, FedEx’s Bylaws require stockholders to give
advance notice of such proposals. The required notice must be given no more than 120 days and no
less than 90 days in advance of the anniversary date of the immediately preceding annual meeting.
Accordingly, with respect to our 2008 annual meeting of stockholders, our Bylaws require notice to be
provided to FedEx Corporation, Attention: Corporate Secretary, 942 South Shady Grove Road,
Memphis, Tennessee 38120, as early as May 27, 2008 but no later than June 26, 2008. If a
stockholder fails to provide timely notice of a proposal to be presented at the 2008 annual meeting,
the chairman of the meeting will declare it out of order and disregard any such matter.
By order of the Board of Directors,
CHRISTINE P. RICHARDS
Secretary
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